August 8, 2017 2:24 am JST

Japan Display may seek outside backer to power turnaround

Thousands of jobs would be cut in overhauling LCD business

JDI's plant in Nomi, central Japan (Photo by Ken Kobayashi)

TOKYO -- Japan Display is considering taking on a capital infusion from an outside partner as part of sweeping restructuring efforts that would shift its focus to cutting-edge display technologies.

The maker of liquid crystal display panels -- formed through the 2012 merger of the LCD operations of Hitachi, Sony and Toshiba -- has seen earnings plunge in recent years. Smartphone makers including Apple, its largest customer, are increasingly turning away from LCDs and toward state-of-the-art organic light-emitting diode displays, where the Japanese company lags far behind South Korean rivals.

JDI, as the company is also known, has drawn up plans for extensive revamping in response, and is on the hunt for investors at home or abroad that can help shore up its shaky financial base and lend a hand in running operations. The manufacturer hopes to choose a partner as soon as next year.

Overhauling panel operations is priority No. 1. JDI plans to cut back LCD production and lay off more than 3,500 workers, primarily at parts assembly plants in nations such as China and the Philippines. In Japan, roughly 250 volunteers will be sought for an early retirement program. These measures will reduce the company's workforce, which totaled around 13,000 at the end of March, by roughly 30%, eliminating more than 50 billion yen in fixed costs annually.

JDI aims to halt production of LCD smartphone panels at a plant in the central Japanese city of Nomi later this year. Several hundred workers will be transferred to other factories nearby. The closed lines could then be repurposed to make OLED panels.

Price of playing catch-up

These measures will not come cheap: JDI plans to book a charge of more than 150 billion yen ($1.35 billion) in the year ending next March to cover expenses such as asset impairments and staff cuts. Many expect a net loss as wide as 200 billion yen, marking the company's fourth straight year in the red, as LCD panel sales are projected to remain sluggish.

Three leading creditor banks -- Mizuho Bank, Sumitomo Mitsui Banking Corp. and Sumitomo Mitsui Trust Bank -- have already said they will extend the manufacturer new lines of credit worth 110 billion yen. The public-private Innovation Network Corp. of Japan, JDI's top shareholder, pledged to guarantee those loans.

Currently, only South Korea's Samsung Electronics can reliably mass-produce OLED smartphone panels, though compatriot LG Display is hot on its heels. Chinese display makers, too, are pouring investment into developing those devices, with the help of government funding. But JDI has not invested apace in OLED research and development, due both to a financial crunch and a miscalculation of which direction the industry would take, leaving Japan struggling to catch up to its Asian neighbors.

(Nikkei)

Japan Display, Inc.

Japan

Market(Ticker): TKS(6740)
Sector:
Industry:
Electronic Technology
Electronic Components
Market cap(USD): 1,094.43M
Shares: 601.41M

Hitachi Ltd.

Japan

Market(Ticker): TKS(6501)
Sector:
Industry:
Producer Manufacturing
Industrial Conglomerates
Market cap(USD): 31,851.41M
Shares: 4,833.46M

Sony Corp.

Japan

Market(Ticker): TKS(6758)
Sector:
Industry:
Consumer Durables
Electronics/Appliances
Market cap(USD): 48,609.36M
Shares: 1,264.38M

Toshiba Corp.

Japan

Market(Ticker): TKS(6502)
Sector:
Industry:
Consumer Durables
Electronics/Appliances
Market cap(USD): 11,567.18M
Shares: 4,237.60M
Asia300

Samsung Electronics Co., Ltd.

South Korea

Market(Ticker): KRX(005930)
Sector:
Industry:
Electronic Technology
Telecommunications Equipment
Market cap(USD): 297,879M
Shares: 148.18M
Asia300

LG Display Co., Ltd.

South Korea

Market(Ticker): KRX(034220)
Sector:
Industry:
Distribution Services
Electronics Distributors
Market cap(USD): 9,499.11M
Shares: 357.81M

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