Mannerisms

The Pioneer-Sharp collaboration looks a good one in several ways. Sharp is trying hard to get its LCDs into the automotive industry and, to do that, needs to add intelligent electronics to its LCD modules. Pioneer has excellent in-car electronics capabilities. That seems a natural match with Sharp's displays.

Another thing is that Sharp has for long been wary about OLEDs, whereas Pioneer has a strong position in OLEDs. This could help Sharp out of a problem if OLEDs become more mainstream.

The two companies have said that their areas of joint operation will be DVD, automotive, home networks and AV.

Sharp President Mikio Katayama said yesterday: “In this environment if a company tries to secure the necessary technologies, it will require a huge amount of time and human and financial resources, leading to the loss of business opportunities.”

Today the expected sale of Sanyo Semiconductor was said to have been completed, with an announcement expected early in October. The buyer is Japanese private equity company Advantage Partners. The price is said to be Yen100bn ($875m).

The proposed Toshiba-Sony amalgamation, reported to be currently under negotiation with finalisation planned for the end of the year, also looks a natural fit.

The two companies have collaborating on several generations of PlayStation processors, the latest being Cell, and Sony is Toshiba’s biggest single customer for semiconductors.

In pursuit of Cell, Sony spent billions on developing leading edge semiconductor technology believing that superior technology would be the prime competitive element in PlayStation.

Then along came the Nintendo Wii which demonstrated that the clever use of inexpensive sensors could produce just as effective a competitive advantage in the games machine market.

It is not surprising that Sony’s new CEO, Howard Stringer, could find little use for keeping on investing in leading edge semiconductor technology, and it’s not surprising that Toshiba should want to buy Sony’s semiconductor operation. Toshiba has been short of semiconductor manufacturing capacity all year.

It is said that the proposed deal will include the Cell processor and the fab lines used to construct it. The price is said to be the same as that paid for Sanyo Semiconductor - Yen 100bn.

Although Sony is expected to keep its capability in image sensors, principally CCDs, it is thought that the deal will mark the end of the company's involvement in leading edge chip fabrication.

Further out there is the continued rumour that, one day, NEC, Toshiba and Fujitsu may put their semiconductor operations together. Since they could not even agree on the setting up of a joint fab a couple of years ago, it would seem that this merger, if it ever happens, is a very long way off.

In the past, mergers in the technology sector have usually been for economic reasons surrounding the increasing cost of developing semiconductor processes.

That explains deals like the formation of Renesas Technologies, created by putting together the semiconductor operations of Hitachi and Mitsubishi.

Another such deal was the formation of Elpida created from amalgamating the memory chip businesses of NEC, Mitsubishi and Hitachi.

Nowadays, as well as the technical and economic reasons for these high technology mergers, there is now another driving force: the fear of the Wall Street private equity firms which have been stalking Japan's technology sector all this year.

The Japanese technology sector appears to be circling the wagons in preparation for the slings and arrows of financial predators.

Getting together is one defence against predators, on the assumption that the bigger they get, the harder they are to swallow.