JDI Downsizing People and Plants
August 14, 2017
 
Japan Display is tapping new investors for capital to catch up in OLEDs as its late entry into the technology is costing the display maker orders from its largest client, Apple. The LCD maker also outlined an operational overhaul under, which it will streamline production lines and slash 3,700 jobs (30 percent of its workforce) resulting in a one-time loss of 170 billion yen ($1.55 billion) for the current year.  JDI is closing the company’s Gen 5.5 LCD plant in Nomi at the end of this year.  The plant is a 25,000 sheet/month LTPS line that has been in operation since 2012, but has seen low utilization for the last few quarters.  After closure, the plant could be converted to a small panel OLED production site, but no decision has been made as of yet. JDI will also close its Gen 4.5 OLED pilot line in Ishikawa, but they have recently opened a Gen 6 pilot line at their Mobara facility, which would have more relevance to actual OLED production at that plant in the future. The company also warned of potential inventory write-downs and staff reductions, primarily workers outside of Japan, and initiate pay-cuts of 20% to 5% from the Chairman down to managerial levels through March 2018.  Japanese electronics makers have struggled to compete against their Asian rivals, ceding market share to Chinese competitors at the low end of the market but also failing to innovate enough to stay ahead in high-end products. Japan Display plans to start mass-producing OLED panels for smartphones in 2019, while Apple, whose orders currently account for more than half of the firm's current sales.  "We now see no future for the smartphone panel business without OLED," CEO Nobuhiro Higashiiriki said at a quarterly results briefing. "We have strategically changed our direction." In the red over the past three years, Japan Display posted a net loss of 31.46 billion yen ($286.13 million) in the quarter ended June, versus a 11.8 billion yen loss a year ago.  Higashiiriki said the firm will seek partnership with global companies, potentially Chinese panel makers. "Partnership could take various forms," with a capital injection among options, he said. The Chinese are a potential investor but Japan Display's main investor - the state-backed Innovation Network Corp of Japan (INCJ) – might not allow Chinese players to take a stake in the firm, said Masayuki Otani, chief market analyst at Securities Japan. But the firm's continuing struggle questions the validity of government interventions in business. Quick and bold investment decisions that are crucial in the competitive tech industry are often hard to make for funds with taxpayers' money, analysts said. JDI also received a ‘commitment line’ for 107b¥ ($975m US) which is held by Mizuho Bank, Sumitomo Mitsui Bank & Trust, and is guaranteed by the INCJ. Sharp chimed in by saying it is willing to extend a helping hand to JDI hoping to form a joint team to develop LCD products in Japan, according to company president Dai Cheng-wu. Dai made the remarks during a meeting with Japan-based media on the first anniversary after he assumed his current post. Under Sharp guidance, JDI will be able to regain its confidence and also should not worry about the possible leak of its technologies, Wu said. However, there could be antitrust issues if Sharp invests in or acquires JDI, Dai noted, who also believes there will be other ways to solve the issue. 

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