Toshiba Corp's loss-making LCD unit will invest in a joint venture in China to tap growing demand for mobile phone displays and offload equipment as it shifts its focus in Japan to high-resolution products.

Restructuring Toshiba Mobile Display Co (TMD), which makes small and midsize LCDs, said on Wednesday it will help set up a new joint venture with Chinese LCD maker Greentech Group.

TMD, whose displays are used in cellphones, car navigation systems and laptops, will supply unused equipment from amorphous silicon LCD lines it shuttered in March in Toyama Prefecture, northern Japan.

The company, which is shifting its focus to high-resolution displays using low-temperature polysilicon and organic light-emitting diode technology, is likely to take a less than 20 percent stake in the Chinese venture.

Greentech is expected to take a 60 percent stake, while a Hong Kong investment fund will take the rest, the Nikkei business daily said.

Toshiba, which bought out Panasonic Corp's 40 percent stake in TMD in April, said in January it plans to cut 25 percent of fixed costs in its LCD operations this year.

TMD reported a 36.2 billion yen ($380 million) operating loss in the business year ended in March and aims to break even this year.

Shares of Toshiba, which plans to announce a medium-term business plan later on Wednesday, were down 3 percent, underperforming Tokyo's electrical machinery index .IELEC.T, which was down 1 percent.

($1=95.22 Yen)

(Reporting by Mayumi Negishi; Editing by Michael Watson)

Japan Nikkei 225 Electronics China