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Sony invests in second LCD plant

Electronics giant teams with Toyota to forge second LCD company for portable devices.

Sony is investing in a second plant to make liquid crystal displays for portable devices.

The electronics and entertainment giant on Thursday announced the formation of ST Mobile Display. The new company, based in Yasu-shi, Shiga prefecture, Japan, will make a type of active matrix LCD--called low-temperature polysilicon thin film transistor--that allows for more advanced screens than another type of LCD technology called amorphous silicon. The screens will be used in portable devices such as digital cameras and mobile phones.

Equipment, facilities and personnel in the LCD plant come from International Display Technology, formerly a wholly owned subsidiary of Chi Mei Optoelectronics. Sony announced its acquisition of International Display Technology in early January for about $172.5 million. Partner Toyota Industries is investing about $1 million in ST Micro Display.

Sony and Toyota have teamed in the past to produce LCDs for portable devices, through a joint venture called ST Liquid Crystal Display.

Production at the new plant will start in April of 2006; Tadaharu Tsuyuki will serve as president.

Sony has joined forces with a number of companies to invest in display companies. The most prominent agreement was made with consumer electronics rival Samsung to join S-LCD. The moves have been aimed at spreading the risk and cost in manufacturing plants, which require initial investments ranging into the billions.

However, the payoff is avoiding having to turn to suppliers in the volatile panel market, where price fluctuations can eat into margins and wreak havoc on revenues at inopportune times. Sony has experienced this firsthand in its LCD TV business, where supply shortages in the market proved costly.

More and more portable devices are coming with built-in displays, and the quality of the screens will prove significant to the devices' popularity. For example, the display on the recently released PlayStation Portable has been lauded by reviewers and has, in part, played a role in the handheld's success. At the same time, consumers have complained about dead pixels on the screens, and Sony has responded.