UPDATE 1-Nippon Sheet to exit JV with Hoya -paper

(Updates with company comment, adds share price, background)

TOKYO, Nov 30 (Reuters) - Japan's Nippon Sheet Glass Co Ltd (5202.T) is looking to sell its 50 percent stake in a joint venture with Hoya Corp (7741.T) as it quits production of motherglass used in liquid crystal display televisions, the Nikkei business daily reported on Friday.

Price falls and mounting upfront costs to make bigger glass substrates are prompting glass makers with inadequate scale to pull out of operations with thinning margins.

Nippon Sheet Glass spokesmen said that nothing had yet been decided and declined comment about whether it was considering the sale.

The joint venture, NH Techno Glass Corp., produces LCD glass substrates in Yokkaichi, western Japan, with operations in Taiwan, Singapore and South Korea and annual sales of around 50 billion yen ($455 million). The company posted a net profit in the year ended March.

The market for motherglass, from which glass for LCD TVs are cut, is dominated by Corning Inc (GLW.N) and smaller Asahi Glass Co (5201.T) and Nippon Electric Glass Co (5214.T).

The report came a day after another Japanese glass maker, Central Glass Co (4044.T), said it and France's Saint-Gobain Glass (SGOB.PA) was pulling out of a joint venture to make plasma TV motherglass with South Korea's Hankuk Glass Industries Inc (002000.KS), as more consumers opt for LCD TVs over plasma TVs.

LCD TV makers are increasingly shifting to larger substrates, with Sharp Corp (6753.T) saying it would use 10th generation LCD panels at its planned plant in Sakai, western Japan, to go onstream by March 2010.

NH Techno Glass Corp now has only 7th generation production technology.

Nippon Sheet Glass has scaled back its plasma TV glass substrates, to focus on glass used in cars and construction materials.

Shares of Nippon Sheet Glass were up 1.9 percent to 601 yen at the end of the morning session, while Hoya was up 0.5 percent. The benchmark Nikkei average .N225 gained 1.2 percent. (Reporting by David Dolan and Mayumi Negishi; Editing by Malcolm Whittaker)