LG Display, the world’s second biggest flat-screen maker, has joined the rush among Asian manufacturers to make e-paper displays – the flat screens used in the fast-growing electronic reader market.

The South Korean company on Monday signed deals with two subsidiaries of Taiwan’s Prime View International, which supplies the key display component for popular electronic readers such as Amazon’s Kindle and Sony’s Reader.

E Ink, which is based in Massachusetts, will supply e-paper to LG Display, while flat-panel maker Hydis Technology will work with the South Korean company to develop future e-paper display modules.

The two sides will cross-purchase products from each other and LG Display will also buy $30.5m of bonds issued by Hydis as part of the agreement. LG Display has this month invested $10m for a 0.5 per cent stake in PVI.

“The deal will allow us to strengthen our competitiveness in the e-paper business and reinforce our future growth framework at the same time,” said Kwon Young-soo, LG Display’s president.

The deal gives LG Display the technology to make e-paper displays, which differ from LCD screens in that they do not have an internal light source.

This will allow further expansion of global manufacturing capacity for e-paper displays and increase the potential for future price cuts for e-readers should demand fail to live up to rising expectations.

“PVI is a leading player in the e-paper market, which is a promising future business. So we want to expand co-operation with them in terms of future technology,” said an LG spokesman.

LG Display’s entrance also breaks Taiwan’s dominance of e-paper display manufacturing. Taiwan’s AU Optronics and Chi Mei Optoelectronics, the world’s third and fourth biggest flat-panel makers respectively, are both already mass-producing e-paper displays after having secured a market foothold this year.

Chi Mei last month announced a similar partnership with PVI, and AU Optronics earlier took a 31.6 per cent stake in SiPix Imaging, which uses a rival technology to E Ink to produce e-paper.

The deal helps PVI, which accounts for about two-thirds of the e-paper display market, secure another partner just as rival technologies like Sipix and Japan’s Bridgestone are starting to come to the fore.

While there has been a spate of new e-reader models launched, there are doubts about whether e-readers, which are still incapable of colour displays, will become a mainstream consumer product.

Lee Kuen-Yao, chairman of Taiwan’s AU Optronics, told the Financial Times this month that it would be at least another five years before they became an everyday tool.

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