Electronics giants Matsushita and Hitachi said Monday they have agreed to tie up in the plasma display panel business amid diving prices and intensifying competition.

The alliance between Hitachi Ltd. and Matsushita Electric Industrial Co., known for the Panasonic brand, will make them a dominant force in plasma display panels at a time when Japanese electronics makers are seeing profits drop against stiff competition from South Korean producers.

Tokyo-based Hitachi and Osaka-based Matsushita said they believe plasma display panels are the most suitable displays for slim, large-screen, high-definition TVs. Plasma displays are used in 90 percent of such sets, they said.

The companies will standardize next-generation plants, work together in marketing and enter cross-licensing agreements in technologies. Matsushita is also thinking of investing in a Hitachi company that is managing its plasma display patents, and other collaborations are in the works, the two said.

Last week, Hitachi said it was beefing up its plasma display panel TV business by buying technology from rival Fujitsu Ltd., a pioneer in the technology, and taking an 80 percent stake in the PDP venture it has with Fujitsu.

Plasma display panels are being increasingly used in large thin TVs that are replacing old-style CRT televisions. But the global market is turning out to be a heated battle between models that use plasma display panels and others with liquid-crystal displays.