The 16 month old alliance between Sony and Sharp to jointly manufacture LCD screens is under threat as six months of talks on the funding of a new factory have failed to produce results.
When talks started in January 2009, it was stated they would be completed by June 30th. Sony has had a joint LCD manufacturing operation with Samsung since 2004, and Sony is also said to be in talks with LG Display over the supply of panels.
When Sony and Sharp originally announced their co-operation on LCD manufacturing in February 2008, it was envisaged that they would jointly build the world's most advanced LCD plant, capable of handling 2.8m x 3m glass sheets at a cost of nearly $4bn and due to start production in April 2009.
The idea was that Sony would own a third of the plant, and be entitled to a third of the output of 40 inch and 60 inch displays.
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In January 2009, the start of operations was put back to March 2010 and in April 2009, it was postponed again to October 2010.
Underlying the stalled talks are a softer market for LCD panels, and a bad financial situation at Sony.
Beset with 20% to 30% annual price erosion, the $80bn LCD market is expected to shrink this year.
For the financial year to the end of March, Sony reported a net loss of $1bn, its first loss for 14 years, and projected a bigger loss, at $1.26bn, this year. The company said, when it announced its results, that it is looking for $3bn in cost cuts.
All that Sony and Sharp are saying about their stalled LCD joint venture factory is that the talks are taking longer than expected.
See also: Sharp advances G10 LCD panel production