S-LCD, a flat screen joint venture between Sony and Samsung, said it would reduce capital by $555 million.
In a statement on Monday, S-LCD, which supplies panels to Samsung and Sony, said the move was aimed at improving its capital structure.
The 50-50 LCD joint venture announced its first capital reduction of 600 billion won ($555 million) after more than tripling its capital to 3.9 trillion won since Sony and Samsung formed the venture in 2004 with 1.26 trillion won to ensure smooth supply of flat screens for Sony.
Sony will not raise its stake in a separate LCD venture with Sharp for at least a year, a Sony source said last week.
Panel makers have reduced production after the powerful earthquake on March 11 but demand from TV and computer makers is too weak to absorb even lowered supplies, sending prices of large-sized LCD panels down.