Toshiba's Oita factory produces large-scale integrated circuits for use in digital household appliances. (Toshiba Corp.)
Toshiba Corp. will construct a plant for medium- and small-size liquid crystal panels with Apple Inc. for use in smartphones, part of a larger series of moves to reorganize and refocus its operations for electronics components.
Sources said Friday the plant will be built in Nomi, Ishikawa Prefecture, on a 100,000-square meter plot belonging to a Toshiba subsidiary.
Toshiba and Apple are together expected to invest more than 100 billion yen ($1.2 billion) in the plant. Construction is slated to start in March with operations set to begin in April 2012.
The plant will employ about 250 people and focus on producing liquid crystal panels for use in the ever-popular iPhone, according to sources.
They said that Apple sounded out Toshiba about increasing production after it faced a chronic shortage of panels capable of providing high-resolution images and handling multiple functions.
Toshiba had to scale back its domestic production of small- and medium-sized panels following a drop in demand with the global economic downturn triggered by the collapse of the brokerage firm Lehman Brothers in 2008.
According to the sources, Apple will shoulder a three-quarters share of the investment burden, while Toshiba will cover the remainder.
Apple, which pioneered the smartphone market, is rapidly starting to feel the heat from rival products using Google's operation software.
To stay ahead of its competitors in the market, Apple concluded it that it was vital to secure a steady supply of key components and approached Sharp Corp. as well as Toshiba.
Sharp is also said to be mulling a boost of production with support from Apple.
Meantime, Toshiba unfurled its plan for reorganizing its production of large-scale integrated circuits (LSIs) used in TVs and household appliances, which includes outsourcing production to multiple outside companies, among them South Korean rival Samsung Electronics Co.
Samsung is now maneuvering to gain supremacy in the production of flash-memory chips, which is Toshiba's mainstay. Fierce competition from the South Korean manufacturer was said to have forced Toshiba to withdraw from production of another line of chips in the past, namely DRAMs.
Despite their rivalry, the partnership is part of a trend in the industry to divvy up labor among competitors.
Another key move under Toshiba's reorganization plan is its plan to sell off its semiconductor production facility in Isahaya, Nagasaki Prefecture, to Sony Corp for about 50 billion yen.
The moves are meant to lighten the burden created by production facilities for non-mainstay semiconductors and refocusing resources on growth areas.
Toshiba hopes to focus its energies on flash-memory chips, which are in much demand for use in smartphones and other handsets.
Toshiba has already begun construction of a production facility at its Yokkaichi plant in Mie Prefecture, with plans for production to start in July 2011.
(This article was written by Masaki Hashida and Kenichi Goromaru)