By Matthew Henry

TOKYO: Hitachi and Panasonic have formed an agreement to supply each other with large screen plasma panels to reduce the cost of plasma TVs in the face of a growing challenge from LCD makers in the large-screen market.

Hitachi will supply Matsushita, the maker of the Panasonic brand, with 85-inch panels for use in Panasonic-branded plasma TVs while Hitachi will source Panasonic’s 103-inch panel for its own branded TVs.

The partnership between Hitachi and Panasonic will allow both brands to market 85-inch and 103-inch panels and benefit from the efficiency gains associated with manufacturing larger quantities.

Geoff Hannaford, the current Hitachi Australia general manager – sales and marketing and interestingly the former director of Panasonic Australia’s consumer electronics division, said the new arrangement builds on existing ties between the companies in respective flat panel TV businesses.

"It’s critical for all manufacturers to reduce costs in the supply chain and this is an extension to our existing partnership with Matsushita, following on from the joint venture agreement for the LCD panel category, IPS Alpha,” Hannaford told

“The two companies in Australia have completely different go-to-market strategies and Hitachi will continually aim to provide its consumers with a brand experience on both quality and value."

IPS Alpha is 50 per cent owned by Hitachi Ltd, with Matsushita Electric and Toshiba Corporation each owning a 22 per cent share and the Development Bank of Japan and others holding six per cent.

Until recently, Panasonic’s 103-inch panel was incorporated into the largest flat TV in the world. But in a brazen challenge to plasma’s long-term dominance in sizes larger than 42 inches, Sharp recently unveiled a 108-inch Aquos LCD, sending the message that LCD is invading plasma’s heartland territory in big-screen entertainment.

According to Japan’s Nikkei newspaper, the panel sharing deal also has the added benefit for Panasonic in ensuring another major plasma manufacturer continues to support the technology.

Panasonic is the strongest backer of plasma products worldwide and the market leader with over 30 per cent market share.

Locally, Panasonic recently launched a multi-million dollar marketing campaign featuring Australian Olympian, Matt Shirvington, to promote the benefits of plasma technology in big-screen TVs.

Hitachi has postponed the construction of a new plasma facility until 2008 and LG Electronics recently relocated its plasma manufacturing to China to cut costs.

Meanwhile, Sony has dedicated itself solely to LCD, and Samsung Electronics – a partner with Sony in the S-LCD plant – is placing greater emphasis on LCD in its television business.