UPDATE 1-Panasonic, Sumitomo Chem co-developing OLED panels

* Panasonic, Sumitomo in ties to develop super-thin TV panels

* Panasonic shares down 0.7 pct vs Nikkei’s 0.1 pct slide

TOKYO, May 8 (Reuters) - Japan's Panasonic Corp 6752.T said it was developing advanced display panels based on organic light-emitting diode (OLED) technology with Sumitomo Chemical Co 4005.T, in a bid to stay in the race in the next-generation TV market.

OLED panels consume less energy than other panels and make light, thin displays with sharp pictures.

In 2007, Sony Corp 6758.T launched the world's first OLED TV, with a thickness of 3 mm. But the high manufacturing costs and small display size have prevented these TVs from seriously threatening LCD and plasma models.

Panasonic said it was also cooperating with other partners to develop OLED technology, though it didn’t name any companies.

The maker of Viera-brand flat TVs said it had made no decisions on the commercialisation of OLED-based products.

The Nikkei business daily said Panasonic and Sumitomo Chemical were aiming to set up a joint venture to develop and manufacture 40-inch or bigger OLED panels by 2010.

Sony currently offers 11-inch OLED TVs.

Shares in Panasonic were down 0.7 percent at 1,500 yen, underperforming the Nikkei average .N225, which was virtually unchanged. Sumitomo Chemical was down 0.7 percent at 418 yen. (Reporting by Kiyoshi Takenaka)