Sony, Japan's number two consumer electronics company, and Samsung Electronics, one of the world's largest makers of LCD (liquid crystal display) panels, are getting serious about a tie-up in the flat panel display business.
The two companies said Friday that they are in talks on just such an issue. Previously, Sony had said that Samsung was one of a number of companies with which it was exploring the possibility of a joint venture. Sony announced earlier this year that it wanted to make an investment in LCD panel production rather than just outsource its production needs to other companies.
Confirmation of the talks, which have been the subject of speculation in Tokyo and Seoul for several weeks, came after a report in the Friday morning edition of the Nihon Keizai Shimbun business newspaper said the two companies have already reached a deal.
"We are in negotiations with Samsung but nothing is final yet," said Gerald Cavanagh, a Sony spokesman in Tokyo.
An almost identical comment was made by Samsung. "We have been talking on positive terms but nothing has been decided," said Yim Jun, a Samsung spokesman in Seoul. Yim added that "an announcement" can be expected within weeks without elaborating on what the announcement might be.
The Nihon Keizai report said basic agreement had been reached by the two companies to establish a joint venture to build an LCD plant. The plant will contain a so-called "seventh generation" production line, which is one that uses glass sheets 1.9 meters by 2.2 meters. This is larger than current sixth-generation and older lines can handle, and allows for larger panels to be made and for production costs to be reduced.
An agreement to form the 50:50 joint venture could be signed as early as next week pending approval at a Samsung board meeting that was due to be held Friday, according to the newspaper. Samsung, contacted after the board meeting had ended, declined to comment on whether the matter had been discussed.
The joint venture will be initially capitalized at 200 billion won (US$171 million) and construction is expected to begin within the year at Asan, in South Korea, said the report. The company will draw its chief executive officer from Samsung, the newspaper reported.