"It is true that we are having talks with Samsung over a joint LCD venture ... although details are yet to be decided," a Sony spokeswoman said.

The Nihon Keizai Shimbun newspaper reported on Friday that Sony Corp. and Samsung Electronics Co. Ltd. had reached a basic agreement on investing a total of 200 billion yen (1.8 billion dollars) to build a factory in Asan, central South Korea.

Last month Samsung said it was in talks with Sony on business ties in flat panel operations.

The factory will start the world's first mass-production of seventh-generation LCD panels, which are much larger than the preceding generations, the economic daily said.

The production, split in half between the two firms, will start in late 2004 at the earliest, it said.

The daily said the firms aim to facilitate their joint development of flat-panel televisions and take a leading position in the growing market, given Sony is the world's top TV manufacturer and Samsung is the world's biggest LCD panel producer.

The seventh-generation panels measure 1.9 metres by 2.2 metres (6.27 feet by 7.26 feet), compared with the sixth generation measuring 1.5 metres by 1.8 metres (4.95 feet by 5.94 feet), the latter of which is planned by Sharp Corp. and Taiwanese firms.

The larger the panel is, the more TV screens can be produced from it at lower costs, the paper said.

Monthly production is estimated at about 100,000 units for use in television sets manufactured by Sony and Samsung as well as for sale to other companies, it said.

The companies are expected to sign the agreement as early as next week, following approval at a Samsung board meeting on Friday, it said.

Shares in Sony rose 110, or 2.73 percent, to 4,140 in Tokyo on Friday morning.

SPACE.WIRE