On Friday, electronics giants Sharp and Toshiba announced an agreement to collaborate on LCDs. The Japanese companies are market rivals, but both sides anticipate significant advantages from the alliance.

The move is expected to allow each company to leverage its respective strengths and resources, particularly Sharp’s capabilities in LCDs and Toshiba’s expertise in semiconductors. Sharp and Toshiba will launch the collaborative partnership in 2008.

The first initiative will be an expansion of an existing reciprocal procurement agreement. Sharp will purchase computer chips for use in LCDs from Toshiba, while Toshiba will purchase LCD panels for TVs that are 32 inches or larger from Sharp.

Surviving the Competition

The companies made the announcement at a news conference at a hotel in Tokyo. Toshiba President Atsutoshi Nishida told reporters that the partnership combining the product strengths of both companies would create a win-win relationship.

“To survive the brawny competition, we need to be strong in both the

key devices of panels and the technology of system LSIs,” Nishida told reporters, referring to the sophisticated chips increasingly used in digital consumer goods that are Toshiba’s forte. “It is difficult for one company to handle both.”

The global market for LCD TVs is growing at a brisk pace, a trend expected to continue in coming years. Indeed, factors such as rising demand, increasing prices, and a tightening supply have caused market research firm iSuppli to raise its forecast for shipments of large LCD panels for 2007 and beyond.

Global revenue for large LCD panels will rise to $66 billion in 2007, up 22.2 percent from $54 billion in 2006, according to iSuppli. that figure represents a 6 percent increase compared to iSuppli’s previous forecast of $62 billion for 2007. In 2007, worldwide shipments are forecast to reach 353.8 million units, up 25.2 percent from 282.5 million units in 2006. Previously,…

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