Sony and Samsung are doing a joint venture for S-LCD, a flat screen output. However, on Monday, news came that Sony would be reducing the capital by $555 million as it is presently struggling with perennial losses from its TV business and Samsung is asking to shift it to a new type of display.

The global liquid crystal display market is struggling after it got many complaints from the consumers related to its life-span and quality of the product.

"The decision reflects shrinking demand from Sony after the devastating earthquake in Japan last month and the sector's overall shift in focus to OLED display", said Kim Sung-in, an analyst at KB Investment & Securities.

Sony has already purchased 1.1 – 1.2 million units of LCD panels every month but due to its weak sales in Japan, it cannot buy more. Now Sony got to go for an alternative, which is OLED technology, according to Kim.

LCD panel makers are also reducing the production after a massive earthquake devastated parts of Japan on March, 11. The large-sized LCD sales went down by almost one-third over the past one year.

S-LCD, which would be supplied to Samsung and Sony TV would help the companies ti improve its capital structure.