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JDI Puts a Hold On Its OLED Production Plans
April 09, 2018
 
Japan Display held a 2nd call for those that were unable to attend their original call explaining the restructuring and financing that they are implementing.  They emphasized:
 

• LCD – Bezelless LCD displays are hot currently, much more so than expected six months ago.  The shift toward this display mode was far faster than expected, and is part of the LCD supply chain, which leaves mostly design and manufacturing issues.  The relative investment vs. OLED is small, and products will be available later this year.
• Evaporative OLED – JDI is delaying decisions on the development of small panel OLED as they evaluate the consumer reaction to new OLED devices later this year.  While they expect to continue their OLED R&D and work toward commercialization, they have limited resources, which would be diluted by an aggressive OLED development plan, without the engagement of a specific customer.  Given the disappointing iPhone X sales, JDI has opted to maintain their focus on LCDs, while the rest of the industry continues to push OLEDs.  
• Printed OLED –JDI will provide marketing and distribution support to JOLED but they indicated that the ink-jet printing technology will take more time to commercialize, and while JOLED is shipping some medical oriented product to Sony, the build out of JOLED’s ink-jet capabilities JOLED’s focus not JDI’s.  JDI has been absorbing JOLED’s losses, so they have an understanding of the cost of maintaining the relatively small ink-jet printing pilot program, and going forward will only participate in those losses proportional to their share of their ownership in JOLED, which is 15% currently, so their overall financial involvement is already curtailed, making it less burdensome to JDI.

 
JDI’s solution to the ‘slow death spiral’ that the company has found itself in, depends on their ability to produce a bezelless product that is both cost effective and desirable by the 2nd half of the fiscal year, and convince investors that they can repeat the process in 2019, even as the OLED capacity grows in Korea and China. They reported restructuring losses, which will be less than originally expected (originally 171b¥, now 100b¥ to 120b¥ due to Nomi sale, less capex, and what they expect will be a better business environment later this year), and financing seems to be in place, but customer relationships will be key and will determine whether the company can survive through fiscal 2019.  JDI has already lost the smartphone business with China’s OEMs and will soon face the onslaught of low cost rigid OLEDs from China. Their current hope is that Apple will continue to make some iPhones with LCD panels.