Sharp Corporation of Japan is in talks to secure orders for its LCD television panels from Sony Corporation. It is believed that Sony could purchase around 5 million LCDs from Sharp in the year to March 2010.
The news caused Sharp’s shares to rise 5.2 percent to 2,100 yen at the close on the Tokyo Stock Exchange.
Sony will buy LCDs from Sharp by its next financial year, if all goes according to plan.
Sharp is trying to limit its reliance on its own Aquos TVs, and purchasing panels from Sony would help it meet demand.
Around 80% of the panels which Sharp manufactures are used in its own sets. However, it recently gained Toshiba Corporation as a new customer.
The new relationship with Sony marks a change in business model, according to a report by analyst Yoshiharu Izumi, of JPMorgan Chase & Co. Its success depends on LCD panel prices remaining stable over the long term.
It also means that Sharp will have to compete with Asian manufacturers on cost.