December 20, 2007 – Matsushita Electric Industrial Co., Canon Inc., and Hitachi Ltd. are in talks to form a partnership for organic electroluminescence (OEL) flat panels, likely involving hundreds of billions of yen to establish minority stakes in Hitachi’s display subsidiary, according to local media reports.

Under the deal, reported by the Nikkei daily, Matsushita and Canon would invest more than 100B yen (US ~$883M) from both Matsushita and Canon in the unit, which makes small and midsize LED panels in addition to OEL panels. Hitachi would retain just over a 50% interest. Matsushita has interest in the OEL panels for TVs, while Canon wants them for digital still/video cameras.

Matsushita reportedly also wants to increase to a majority stake in IPS Alpha Technology Ltd., a large-panel LCD production JV currently involving Hitachi Displays (50%), Matsushita (32%), and Toshiba (16%), and would increase current output capacity of 5M panels/year with a ~300B yen ($2.65B) 8G factory.

The company’s plans to increase its LCD interests roughly shift Japan’s LCD panel industry into three groups: the Matsushita-led alliance, Sharp, and Sony/Samsung. Perhaps most importantly, the deals give Matsushita direct access to production facilities — as it had been relying on partners for the LCD panels, it could not secure enough panels when supplies grew tight to achieve its LCD TV sales targets, notes the Nikkei daily, something solved by taking over control of IPS and building a new LCD plant.

In a larger scheme, the deals are likely to boost Japan’s presence in LCD manufacturing, and make the more competitive against Korean and Taiwanese rivals — so said Sharp CEO Katsuhiko Machida, quoted by Dow Jones.