Japan's Fuji Photo Film Co. and China's SVA Electron Co. Ltd. will together spend US$270 million to make colour filters used in liquid-crystal displays, Fuji Photo said on Tuesday.

It said it will set up a joint venture in Shanghai with electronics parts maker SVA Electron.

The venture will be capitalised at US$100 million, with the Japanese firm taking a 25 percent stake and SVA Electron, which is based in Shanghai, holding the rest.

The companies aim to tap into growing demand for flat-panel televisions in China. The joint venture will mainly supply to a unit SVA set up with Japanese electronics conglomerate NEC Corp..

Electronics firms are increasingly seeking to manufacture their own filters rather than buying from outside suppliers such as Toppan Printing Co. and Dai Nippon Printing Co., which have dominated the market.

Fuji Photo's venture will begin production in November next year at an expected capacity of 70,000 units per month and a work force of about 500 when production begins on a mass scale, it said.

Tokyo-based Fuji Photo, also the world's biggest maker of film used in flat-panel displays, did not disclose its share of the investment.

It will also invest 4 billion yen (US$34.44 million) to open a research unit in China to help the new venture.

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