NEC and Thomson to merge plasma display units

In the latest consolidation move in the flat panel display sector, Japan’s NEC Corp. and France’s Thomson Multimedia SA have taken the first steps towards merging their plasma display businesses, the two companies said.

The companies signed Wednesday a memorandum of understanding (MoU) to create a new joint venture company that will take over everything from research and development to manufacturing of plasma display panels (PDPs). PDPs are large-sized flat panel displays, often with a diagonal screen size of between 30 and 50 inches, and currently are most commonly used as display monitors in places such as airports or on stock exchange and dealing room floors.

With the signing of the MoU, talks have now commenced on a definitive deal to create a joint global research and development project and, later, the joint venture company.

Plans for the research project, which will spearhead research in PDPs, are expected to be finalized by June this year and will include a pooling of respective patents on PDP technology from both NEC and Thomson. The two companies said they also plan to license their patent pool to other companies interested in PDP technology.

A definitive deal to create the joint venture company will take a little longer to conclude. Both companies are eyeing the end of 2001 as a deadline for the new company’s creation.

The announcement follows recent moves by other companies to team up on research into PDPs and other flat panel displays. Earlier this week Acer Inc. and United Microelectronics Corp. (UMC), two of Taiwan’s largest electronics companies, announced plans to merge their flat-panel display units in an attempt to challenge the market dominance of Korean and Japanese companies.

Just under a year ago Sony Corp. took a 15 per cent stake in Fujitsu Hitachi Plasma Display Ltd., a joint venture established by Fujitsu Ltd. and Hitachi Ltd. to manufacture plasma display panels. Last September, Matsushita Electric Industrial Co. Ltd., which is better known by its Panasonic brand name, and Toray Industries Inc., a leading Japanese manufacturer of synthetic fibers and textiles, announced plans to establish a joint venture company to manufacture PDPs.

Driving the consolidation is the slow take-off of the PDP market. The screens, despite being commercialized several years ago, are still suffering low sales because of their very high prices. Recent breakthroughs in both technology and manufacturing are pushing the price down and companies are beginning to expand their target market from corporate users and very wealthy individuals to include a larger number of high-income earners.

PDPs, because of their size, are being pushed to this market as flat, wall-hanging televisions. Most recently, Hitachi Ltd. announced a 32-inch model with a price tag between US$4,130 and $4,960.

NEC, in Tokyo, can be contacted at Thomson Multimedia, in Paris, can be reached at