The long-rumored merger between Sony, Toshiba, and Hitachi has now become official. The merger of three of Japan’s largest LCD makers, backed by $2.6 billion from the Japanese government, would see the companies combine their small panels used in smartphones, cameras and tablet PCs in order to better compete with South Korean rival Samsung and Japan-based Toshiba. The move would also help the three companies cut costs while driving R&D for OLED at a faster pace. The three companies were all reporting losses in their small LCD productions.

The merger is expected to be completed in the Spring of 2012, which will see the newly-formed entity, called Japan Display, leap ahead of rivals which currently hold larger market shares when compared to the individual companies.

 The three firms together controlled 21.5 percent of the market for small and medium-sized displays last year, larger than Sharp with 14.8 percent or Samsung Mobile with 11.9 percent, research firm DisplaySearch estimates. 

Sony fans can rest assured though that this won’t mean that the next generation Bravia XBR will be created with panels created by Japan Display. Instead, this merger will solely focus on smaller panels, a large and growing field with the introduction of more and more portable devices.

[Via Reuters]