Sony and Sharp, the world's second-and third-largest liquid crystal display TV makers, said they would set up a joint venture to make and sell large LCD panels.
Sharp plans to turn its new 380 billion yen ($3.52 billion) LCD plant, which is being built in western Japan, into a joint venture with Sony.
Sharp plans to hold a 66 percent stake in the venture, with Sony taking the remainder.
The two companies will be holding a joint news conference at at 7:00 p.m.
As liquid crystal display technology grows in importance for flat TV screens, the panel and TV makers have been making major shifts in strategy and forming new alliances.
Signs that rivals Sony and Sharp, who both make flat TV screens, would be cooperating emerged at the weekend, when a source told Reuters that Sony planned to start buying TV-use LCD panels from Sharp.
Sony aims to double LCD TV sales to about 20 million units in the business year starting in April.
Global demand for LCD TVs is expected to more than double to 155 million units by 2012, the Japan Electronics and Information Technology Association said on Thursday.
In a further sign of realignment in the industry, U.S. fund Carlyle will buy a majority stake in an LCD glass maker in a deal worth up to $1.3 billion including debt, the Nikkei said on Tuesday.
The venture, called NH Techno Glass, is held 50 percent by Nippon Sheet Glass and 50 percent by Hoya. Carlyle will buy all of Nippon Sheet Glass's stake and part of Hoya's holding, although Hoya will retain most of the stake, it said.
In other recent industry moves, Panasonic maker Matsushita Electric Industrial, which had until recently invested aggressively in only plasma display technology, said earlier this month it would spend 300 billion yen to build an LCD panel plant by 2010.
Toshiba said in December it would buy large LCD panels from Sharp.