The pact between two of Japan's technology giants doesn't end there. Toshiba, one of the world's top semiconductor makers, plans to return the favor by supplying an array of customized TV chips, which handle the growing workload of digital multitasking in high-end flat-screen sets. "One of Sharp's big challenges is in making chips," Katayama said, as Toshiba CEO Atsutoshi Nishida stood by his side. "For Toshiba, it's LCDs."
Toshiba and Sharp will work together to develop TV technology and products although details aren't decided, said Nishida and Sharp President Mikio Katayama.

You could almost hear the relief in their voices, as they explained details of what they dubbed a "long-term" alliance. Investors, who got a whiff of the deal in a report published early in the day by the Japanese financial daily Nikkei, liked it, too. In Tokyo, Sharp's shares rose 2.9% and Toshiba's climbed 2.5%, outstripping the Nikkei 225 stock average's 1.5% uptick.

Toshiba had also been planning to make TVs with a new kind of flat-panel technology developed with Canon called surface-conduction electron-emitter display, or SED, but those plans have been held up by technological and legal issues.

In January, Canon took full control over SED Inc, the joint venture it set up with Toshiba in 2004 to develop SED technology.