Japan's Seiko Epson Corp said it would start talks with Sony Corp on an alliance in the small- to mid-size liquid crystal display business, including a possible transfer of some of its assets to Sony.
The small LCD panel market has been hit hard by sluggish sales of mobile phones and digital cameras, depressing earnings at display makers like Seiko Epson and Sharp Corp.
Seiko Epson cited the deteriorating LCD business in a warning this week that its net loss for the year ending this month would balloon to ¥100 billion.
The company plans to cut the number of its LCD output facilities from three to one as part of a restructuring of the business.
Seiko Epson was the sixth-largest maker of small and mid-size LCDs in 2008, preliminary estimates by research firm DisplaySearch showed.
Sony, which ranks eighth, said it aims to beef up its LCD business by incorporating Epson's technologies and production capabilities.
The companies aim to agree on a deal by June. (Reuters)