Japan Display Ready to Kick Off in April 2012

Aiming to Become a World Leading Company for Small-Sized and Medium-Sized LCDs

Fumiaki Sato
Representative Director, Co-founder
Sangyo-Sosei Advisory

Japan Display, a new company unifying small-sized and medium-sized panel display businesses run by Toshiba Corp., Hitachi Ltd. and Sony Corp., is planned to finally be officially launched in April this year. The new company will have an investment of \200 billion due to increased allocation of shares to the Innovation Network Corporation of Japan (INCJ) as a third party, with the shareholder ratio being INCJ holding 70% and Sony, Toshiba and Hitachi 10% apiece. This new company will utilize the added-value technologies each of these three companies possess for small-sized and medium-sized displays; use the capital invested to gain high productivity and cost competitiveness, including through the launch of a new production line; and aim to become a world-leading company for small-sized and medium-sized displays.

Why have the Japanese electronics and display industries lost competitiveness over the past 10 to 20 years, and become unable to raise profits? My theory is that it’s because of the following three reasons:

1. Japan has numerous manufacturers, causing a dispersal of factors such as human resources and capital.
2. Despite having a technical edge over Asian companies, things such as corporate tie-ups have led to an outflow of Japanese companies’ technologies, and done so at increasing speed.
3. Management and rank-and-file employees alike are afflicted with what I call “Big Company Syndrome:” they’re too risk averse, creating organizations where mediocrity is acceptable, and have lost sight of what real corporate spirit should be.

Japan still retains the technical edge it has long held in small-sized and medium-sized displays, but may be gradually losing its competitiveness. Mobile markets for products such as Smartphones and tablet PCs have broadened explosively, and because these products require high-end technologies like high definition, wide-viewing angles and touch panels, it must become a segment where the superiority of Japanese technologies will be able to shine. Yet, Japanese display manufacturers have already run out of energy and barely made the capital expenditure or research and development investment to meet demand. This conceals a “schematic” where Japanese manufacturers have been presented with a business opportunity but that opportunity is being slowly grasped by overseas manufacturers.

I would like to offer the following solutions:

1. Concentrate resources to prevent the outflow of technology.
2. Incorporate external capital and management to change corporate culture and create a new company overflowing with corporate spirit.
3. By joining businesses operated by three Japanese companies, there are now effectively only two display manufacturers in Japan. There are also two in South Korea and two in Taiwan. The South Korean companies have a vertically integrated business model and the Taiwanese companies are comparatively better in the commodity segment than their Japanese and South Korean counterparts. The new company will be a specialist display manufacturer, which I believe will become a company capable of providing custom components that meet the advanced requirements of application manufacturers from around the world.
4. Demand for small-sized and medium-sized displays will clearly continue to grow as we go forward, enabling an increase in customers if there is a capacity to do so. If customers are evident, it’s also possible to plan new investments.

Official contracts for the new company were concluded in November last year and preparations are currently being made for its establishment in April this year. Fusing the inherent superior technologies possessed by the three companies and utilization of technologies such as high definition and wide-viewing to provide products with high added-value will create great expectations, including from application manufacturers around the world.

As INCJ holds a 70% share in Japan Display, it will differ from ordinary joint ventures in that its executives will be able to make decisions showing leadership. Initially, the important thing under this strong leadership will be how smoothly the three companies unify and operations go ahead. Japan Display has also firmed its policy to continuously and actively invest in research and development, put organic EL in its sights while considering what to develop, what needs strengthening and what to make, which probably also makes it important to map out a growth strategy for the future.

Japan Display will start from April and I hope it becomes a world-leading company for small and medium-sized displays. No, I’m strongly convinced it will occupy that position.

About the author:

Fumiaki Sato, Representative Director & Co-Founder of Sangyo Sosei Advisory Inc., is widely considered among the most knowledgeable bankers in the Japanese electronics industry. He has critical experience as an engineer, securities analyst and now investment banker in the Japanese technology sector. Among Japan’s most widely respected corporate and technology analysts. Fumiaki began his career as an engineer at Victor JVC .

Join the Global FPD Leadership at

GFPC (Global FPD Partners Conference) 2012

Executives from FPD-related industries from across the world will be at an international executives’ conference all at the same time.

Shuji Ariga, an executive (scheduled) at Japan Display, will speak at the conference under the topic of “Future Developments in Small and Medium-Sized Displays,” as well as talk about the company’s growth strategies.

We look forward to people taking part in this opportunity to form new networks and nurture future growth in the FPD industry. Take advantage of the early booking discount (offered until March 16).

• Conference dates: Sunday, April 15 to Tuesday, April 17, 2012
• Conference site: The Westin Resort and Conference Center Awaji Island (Awaji, Hyogo Prefecture)
• For more details or applications: http://www.semi.org/gfpc