Hitachi said it will buy core plasma TV parts from Panasonic-maker Matsushita Electric Industrial Co , as it restructures its loss-making flat TV business in a market dominated by LCD technology.

Hitachi, which is struggling with flat TV losses, faces intensifying price competition from bigger TV makers Sony, Sharp, Samsung and LG Electronics.

Since February 2005, Hitachi and Matsushita have been working together in various areas such as development, manufacturing, and marketing of plasma displays under a collaboration. With today's announcement, the two companies have signed the memorandum of understanding to strengthen cooperation in flat-panel TV business and display panel (PDP and LCD) business. Hitachi and Matsushita expect to sign the definitive agreement by the end of October 2008.

Regarding the PDP business, Hitachi will procure glass panel components, which have until now been manufactured at Hitachi Plasma Display Limited, from Matsushita. In addition, in order to further develop this flat-panel TV business, the two companies will accelerate cooperation on the development of high-end PDPs that are thinner, more energy-efficient, and featuring distinctive characteristics. Plans call for Matsushita to begin supplying glass panel components to Hitachi for models to be launched by Hitachi in the fiscal year ending March 31, 2010.

The two companies will continue to work together on marketing strategies for plasma TVs. Regarding LCD TVs, Hitachi and Matsushita are joint investors in IPS Alpha Technology, Ltd., an LCD panel manufacturing company, and the two companies intend to strengthen their relationship onward.

Furthermore, Hitachi and Matsushita will continue to discuss the collaboration for flat-panel TV assembly at overseas production bases. In addition, both companies will also pursue lighter, thinner, more energy efficient flat-panel TVs with higher picture quality for flat-panel TVs.

Hitachi holds 7.5 percent of the shrinking plasma TV market according to research firm DisplaySearch.