Victor Company of Japan Ltd (JVC) and Funai Electric will jointly develop and supply LCD television sets, Reuters reported Tuesday citing an industry source.

Bigger rivals such as Sharp have been forming similar alliances in the LCD business, where competition is intensifying.

JVC will supply LCD TVs made at a plant in Mexico to Funai, which will sell them under its own brand in North America, while JVC will market LCD TVs in Europe produced by a Funai plant in Poland, the source said.

The two plan to release a jointly developed LCD TV in 2009.

Funai and JVC representatives said the companies were in talks on a possible alliance but nothing had been decided.

Funai sells a large portion of its products in the United States through Wal-Mart Stores under the Emerson brand.

JVC is set to integrate with Kenwood after Kenwood and asset manager Sparx Group in August acquired a combined 30 percent stake in JVC, taking the loss-making unit off the consolidated accounts of Matsushita Electric Industrial.

Among other tie-ups in the industry, Toshiba agreed in December to procure large LCDs from Sharp, which in turn will buy chips for LCD TVs from Toshiba.

Matsushita plans to take a majority stake in an LCD making joint venture with Hitachi Ltd, and Toshiba and will shoulder the bulk of the cost of a 300 billion yen LCD panel plant planned by the venture.