Toshiba and Sharp to join forces on LCD panels
Toshiba and Sharp were recently pressed their magic rings together proclaiming, “Wonder Twin powers, activate! Form of...a strategic LCD alliance wherein Toshiba buys LCD panels from Sharp and Sharp buys semiconductors from Toshiba!”
Context & Ripple Effects
Toshiba and Sharp have swapped manufacturing strengths rather than capital: per the terms reported by DailyTech, Toshiba will buy LCD panels from Sharp while Sharp buys semiconductors from Toshiba, with the two also agreeing to purchase LCD TV components from each other. The stated driver is fierce competition in the booming flat-panel HDTV market, which is squeezing manufacturers to cut production costs.
The deal lands the same week seven leading chipmakers formed an alliance to jointly develop 32-nanometer transistors and share development costs — a sign that cost-sharing structures are spreading across both panels and silicon. For Sharp, the pact adds large-panel TV demand on top of its existing role supplying displays for Apple's iPhone, stretching its panel business across two product cycles.
First-order effects
- Toshiba secures LCD panel supply without committing to panel fab capacity of its own, while Sharp locks in a captive customer for its panels and a semiconductor source for its own products — both get cost relief immediately in the HDTV price war.
Second-order effects
- Rival TV makers still carrying full in-house panel-and-chip stacks face a competitor whose bill of materials is now partially mutualized, pressuring them toward similar component-swap or sourcing alliances.
- Sharp must now allocate panel capacity between large TV panels for Toshiba and the small displays it ships for Apple's iPhone, making its production mix a live constraint on both businesses.
Third-order effects
- If the pattern holds, Japanese consumer-electronics firms move from fully vertical integration toward a web of bilateral component trades — each firm keeping only the layers where it leads and renting the rest from rivals, with alliance membership becoming a competitive moat in panels and chips alike.
The trend: Flat-panel economics are pushing Japanese electronics makers from owning every layer of the stack toward reciprocal component-supply alliances, with the 32-nanometer chip consortium showing the same logic reaching into semiconductors.