Japanese electronics makers Matsushita Electric Industrial Co, Hitachi Ltd, and Canon Inc have agreed to a broad tie-up to help them better compete in the market for flat panel displays.

Under the pact, Matsushita and Canon will each take a 24.9 percent stake in Hitachi Displays, a wholly owned unit of Hitachi that makes small- and medium- sized liquid crystal displays (LCD) and is developing organic light-emitting diode (OLED) displays.

Hitachi's stake in the unit will fall to 50.2 percent, the companies said in a joint statement. Financial terms were not disclosed.

The plan also calls for Matsushita to eventually take a majority stake in IPS Alpha Technology, an LCD joint venture between Toshiba Corp, Hitachi and Matsushita, and for Canon to take control of Hitachi Displays.

Matsushita said it would then plan to build a new factory at IPS Alpha to help it secure enough LCD panels for its flat TV line-up.

The investment marks a major shift in strategy for Matsushita, which until now has focused its investment in the flat TV market on plasma display technology in the belief that it was the best technology for big TVs above 40 inches.

But LCD panel makers have become more efficient and are beginning to take market share away from plasma in the big sets.

For Hitachi, the move would allow it to reduce its exposure to a loss-making business. Canon meanwhile aims to secure a steady supply of small displays for its digital cameras and printers.

OLED is a promising next-generation technology for flat panels and is expected to replace LCD technology in some applications. - Reuters