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Japan-Update

Sharp to churn out OLED screens for its smartphones

Manufacturer would be first to do so in Japan, but trail Samsung by wide margin

Sharp smartphones on display at a story in Tokyo.

OSAKA -- Electronics maker Sharp will this spring begin commercial production of OLED screens for its smartphones, beating Japanese rivals to the punch as it seeks a slice of a market dominated by South Korea's Samsung Electronics.

The Japan-based manufacturer smelled opportunity with smartphone titans like Apple of the U.S. and Samsung ramping up production of devices equipped with organic light-emitting diode screens. It will get out ahead of the Japan Display group, which hopes to crank out the screens as early as next year.

Sharp -- owned by Taiwanese electronics manufacturing giant Hon Hai Precision Industry, or Foxconn -- aims to start mass-producing the displays in the April-June quarter. The goal is to mount the thin, flexible screens on some of its own premium smartphone models set to launch this summer.

Sharp has invested tens of billions of yen (10 billion yen equals $88.4 million) in small-scale production lines for OLED panels at locations including its home base of Sakai, near Osaka, and has already begun shipping out samples. It will hereafter fine-tune such aspects as image quality and brightness in order to bring the screens to the finished product level.

Moving toward OLED

The light-emitting quality of OLED screens eliminates the need for a backlight, allowing for thinner and lighter phone bodies. The screens' vivid colors and flexibility have prompted companies including Samsung and Apple to adopt the technology in smartphones. OLED TVs have been launched by Samsung compatriot LG Electronics and by Japan's Sony and Panasonic.

Mass-producing the screens is technologically challenging, however, and at present Samsung remains the primary supplier of smartphone OLED screens worldwide.

For TV screens, Sharp is opting to stay focused on liquid crystal displays, which it has positioned as a mainstay business, including by concentrating management resources on ultrahigh-resolution 8K panels. Going forward, the company will consider delving into other niches for OLED panels, such as in automobile displays, and weigh supplying the screens to other businesses. The company judged it necessary to provide consumers more options in addition to large panels.

Sharp is also considering launching its smartphones in Europe this year, and aims to grow its market share overseas by selling OLED models abroad.

Far behind Samsung

While Sharp may become the first Japan-based company to mass-produce OLED smartphone screens, it would remain far behind Samsung. The South Korean company's advantages in production capacity and cost would make direct competition difficult.

Apple's iPhone X uses OLED panels made by Samsung.   © Reuters

Samsung and LG Display hold effective monopolies on OLED displays for smartphones and televisions, respectively. In the 2000s, Japanese peers such as Sony and Pioneer held the lead in the OLED field, but enormous development costs and equipment spending became a bottleneck and they curtailed that business, while the South Korean companies invested proactively and seized the market.

With over 400 million units' worth of production capacity, Samsung has so thoroughly encircled the smartphone OLED market that even the mighty Apple, when it adopted the displays in 2017, had to order them all from its South Korean rival.

Apple is seen as likely to welcome having more manufacturers from which to source a key component. And if Sharp's OLED mass production takes off, it could find new buyers rapidly through its parent Foxconn.

But the competition is on the move. LG, already mass-producing the high-tech screens for TVs, has also announced an investment plan toward making them for smartphones. China's BOE Technology Group, which receives financial support from the government, has mobilized a new factory making the displays in Sichuan Province. And Japan Display -- plus JOLED, its joint venture with partners including Sony and Panasonic -- is hurrying to build a low-cost production system for the screens.

(Nikkei)

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