The two companies have been jointly developing surface conduction electron emitter display (SED) panels since 1999 and aim to have a product ready by next year, a Canon spokesman said.

"If we are able to complete the product, we would like to create a joint venture company with Toshiba early next year," said spokesman Hiroshi Shiozuka, adding the start of production was targeted for 2004.

SED panels will be thinner than liquid crystal displays and consume less electricity than plasma panels, while creating a better image, he said.

Canon could use the product in its office equipment machines such as copiers, or to make computer panels, but its main focus is on marketing television displays, Shiozuka said.

"Making televisions is one of the most important options for us," he said.

Toshiba spokesman Makoto Yasuda said "we are beginning to see the results" of the joint research, but added the timing of the product launch or the creation of a joint company had not been decided.

Annual production of the SEC panels is projected at around 400,000 to 500,000 units, the Nihon Keizai newspaper said Thursday morning.

Canon's Shiozuka said the company aimed to use its marketing channels to sell the products overseas, including in the United States.

Toshiba will focus on the Japanese market, the paper said.

The domestic flat-panel TV market roughly doubled to 234 billion yenbillion dollars) in the year to March 2003 from a year earlier, it said.

The two companies' shares were outperforming the Nikkei-225 index of the Tokyo Stock Exchange Thursday morning, which was up 88.08 points or 0.85 percent to 10,414.47 by 10:20 am (0120 GMT).

Canon shares were up 140 yen or 2.77 percent to 5,190 yen while Toshiba rose six yen or 1.47 percent to 415.

SPACE.WIRE