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Sony focuses LCD talks on Samsung

The Japanese giant is leaning toward rival Samsung in its search for an LCD partner, as the two companies look to tackle the emerging LCD TV market.

Sony is focusing its search for a liquid-crystal display partner on consumer electronics rival Samsung, as the two companies look to tackle the emerging LCD TV market.

Sony has been looking for a partner to produce LCDs and previously confirmed that Samsung was among the companies being considered. The Japanese conglomerate is still in talks with other companies, but it is leaning toward Samsung.

"Sony is currently in discussions with Samsung regarding an investment for the production of LCDs," the company said in a statement, but refrained from further comment.

LCDs are used in products such as PC monitors and notebook displays. However, their popularity is growing in the TV market because consumers are attracted to their thin design and sharp picture quality. LCDs also are increasing in size and dropping in price, because manufacturers have been building plants that can more efficiently produce larger display sizes.

Building LCD plants requires significant up-front investments--often in the range of billions of dollars--for building next-generation manufacturing plants, which are key to driving down costs and creating large-size displays. Companies have been creating joint ventures to defray the risk and raise capital quickly. One of the more successful alliances has been LG.Philips LCD, a joint venture established in 1999 between LG Electronics and Royal Philips Electronics, which quickly rose to challenge Samsung for the top market share for LCD panel shipments.

Sony currently sells LCD computer monitors and televisions but buys the actual LCD from a third party.

The company is looking to challenge Sharp, which made an early entry into the LCD TV market and has moved into a dominate position. Sony has been a significant player in the TV market.

LCD televisions are a small fraction of the overall TV market, but the rapid growth in demand has manufacturers looking to move early and fast into a potentially lucrative business. Worldwide shipments of the devices hit 734,000 in the first quarter, up 223 percent compared with the same period a year ago. About 170 million televisions are shipped annually, according to research firm DisplaySearch.