Japan's Fuji Photo Film Co. and China's SVA Electron Co. Ltd. will together spend $270 million to make color 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 capitalized at $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 venture will begin production in November next year at an expected capacity of 70,000 units per month and a work force of be 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 ($34.44 million) to open a research unit in China to help the new venture.