If you need further evidence that Japan’s display business isn’t so hot today, just take a look at the newly formed Japan Display, a joint small and medium-sized display venture between Sony, Toshiba, and Hitachi.

The companies are working together with the government-backed Innovation Network Corporation of Japan (INCJ), which is investing around $2.6 billion in funds from the Japanese government, Reuters reports. The electronics titans are pooling together their display businesses for mobile devices and tablets to better compete against Korean companies like Samsung and LG, which are dominating the display market.

And to be clear, the news doesn’t mean that the companies are giving up on their profit-draining big screen TV businesses (as much as Sony would like that).

With Japan Display, the companies are bringing together their engineering talents to take on Korean rivals, and they won’t have to worry as much about funding, since INCJ is flush with cash from the Japanese government. INCJ will hold 70 percent of shareholder rights in the company, while Hitachi, Sony, and Toshiba will each get 10 percent.

VB Transform 2020 Online - July 15-17. Join leading AI executives: Register for the free livestream.

Japan Display is set to launch in the spring of 2012. The company also announced today that it has purchased a domestic factory from Panasonic for an undisclosed sum.