A Japanese government body said Thursday it would fund a joint project of leading firms to develop a key technology to produce large, energy-saving organic displays.

The organic light emitting diode (OLED) panel, which is self-luminescent and does not require a backlight, is seen as a promising next-generation display amid fierce competition in the sector.

Smaller OLED screens are used in cellphones and portable music players but no technology has yet been developed to produce large screens.

The project involves one laboratory and 10 companies including leading panel makers Sony Corp., Sharp Corp., and a joint venture between Toshiba Corp. and Matsushita Electric Industrial Co., as well as materials and devices makers.

The New Energy and Industrial Technology Development Organisation (NEDO) will put up about 668 million yen (6.3 million dollars) to finance research and development in the first year of the project.

The project, which will run for five years until March 2013, is likely to cost 3.5 billion yen (32.8 million dollars) in total with NEDO planning to give roughly the same amount in the following four years, an official said.

NEDO said the project was aimed at developing a core technology to mass-produce 40-inch or larger OLED displays in the late 2010s.

"Given the situation that displays are becoming larger and larger, the project is aimed at developing technology to lead to lower electricity consumption," the government-financed institute said in a statement.

Noting OLED uses less power, the institute said it was "indispensable to develop new and basic technology, including manufacturing technology to realise large displays."

The Nikkei economic daily reported Thursday that Japan was forming a public-private alliance to beat South Korean companies amid fierce competition to take the lead in next-generation displays.

Japanese companies aim to put in use the large OLED display technology as soon as possible and make it the de facto world standard, the daily said.

OLED displays, which sandwich a very thin layer of organic material between plates, also offer brighter images and wider viewing angles than liquid crystal display panels.