Rumours are circling the Web that Sharp is to start making LCD panels for its rival Sony.

Sharp is currently number three in the global LCD TV market, while Sony is in second place, and so, should the rumour be true, it could cause a massive shake-up in this area.

Reuters is reporting that it could see the market divided into two clear-cut groups.

This deal would create a stronger alliance between Sharp, Sony and Samsung Electronics.

The latter currently runs an LCD panel joint venture with Sony, along with Toshiba, which said in December it would buy large LCD panels from Sharp.

On the other side is Matsushita Electric Industrial - the owner of Panasonic brand name - and Hitachi who jointly hold a large stake in IPS Alpha Technology, which makes large LCD panels.

Matsushita also announced earlier this month it is going to spend 300 billion yen to build an LCD panel plant by 2010.

And, as we reported earlier today, Pioneer is soon to start buying its 42-inch and smaller panels from Matsushita or Hitachi, according to a story in the Asahi newspaper.

Shares in Sharp Corp jumped 5.2% yesterday upon the rumour about Sony while shares in Pioneer rose 4.3% to 1168 yen on the Asahi newspaper report.

>> Via - Reuters