January 10, 2005 – Sony Corp. said Friday it has agreed in principle with major Taiwanese LCD maker Chi Mei Optoelectronics Corp. to buy a Japanese factory belonging to one of Chi Mei’s subsidiaries for 18.5 billion yen (US$176 million), reported Kyodo News International.

The accord calls for Sony to buy the Yasu, Shiga Prefecture-based factory of Chi Mei’s wholly-owned arm, International Display Technology Co. The factory currently makes color thin-film transistor LCD panels.

The deal requires Chi Mei to spin off the Shiga-based LCD operations as a new company, whose entire shares will be purchased for 18.5 billion yen by Sony.

Sony currently makes small LCDs at ST Liquid Crystal Display Corp., which was set up in 1997 in Aichi Prefecture as an equally owned venture with Toyota Industries Corp.

The joint venture manufactures low-temperature polysilicon TFT LCD panels for use in a range of compact mobile gadgets.

Sony plans to make the Shiga factory a second production base for low-temperature polysilicon TFT LCD panels in view of growing demand for the 55 x 65 cm panels, it said.

To this end, Sony will invest 27 billion yen in the factory to give it a monthly output capacity equivalent to 25,000 LCD panels.

Sony has been expanding its LCD output capacity. It has set up an LCD venture in South Korea with Samsung Electronics Co. to make large LCDs for use in flat-panel TVs. The venture is expected to begin production this spring.