Toshiba and Matsushita to merge LCD units

TOKYO, Japan (CNN) -- Toshiba and Matsushita Electric plan to unify their liquid crystal display (LCD) businesses, creating the third largest LCD company in the world.

The businesses will be merged into a joint venture company, which will be set up in April 2002. It will be 60 percent owned by Toshiba and 40 percent owned by Matsushita.

The global LCD market is expected to surge, largely fueled by the increasing popularity of handheld computers, flat TVs and Internet appliances.

Both Toshiba and Matsushita believe the LCD venture would allow them to accelerate the development of next-generation LCD panels and enhance their global competitiveness.

"Making best use of the synergies and efficiency enhancements expected from unification, the new company will seek to take a leading position in the global market for LCDs and next generation displays," the companies said in a statement.

Fierce competition in flat panel displays

The tie-up is the latest alliance in the flat panel display sector as Japan's struggling tech giants face fierce competition, high research and development costs, and a global IT slowdown.

Japan's NEC announced plans to outsource its flat panel display output to Taiwan's Chi Mei Optoelectronics.

Panel display makers are striking alliances to ease the burden of developing expensive leading edge technologies like organic light emitting displays (OLEDs).

Toshiba and Matsushita plan to jointly develop OLED technology, the next growth area in the sector that is slated to become the display of choice for mobile handsets and flat TVs.