Sony Corp., Toshiba Corp., Hitachi Ltd. and Innovation Network Corporation of Japan announced Wednesday a plan to merge their operations and create the biggest company in the global market for small and medium-size liquid crystal displays, which are used in products such as smartphones and tablet computers.
After the merger, the new company, Japan Display, will have the largest global market share of 22 percent in the small and mid-size LCD sector, ahead of Sharp Corp. with 15 percent and South Korea’s Samsung Electronics Co.’s 12 percent.
INCJ, a government-backed investment fund that aims to boost the competitiveness of domestic firms, will invest ¥200 billion in Japan Display. The merger will integrate Hitachi Displays Ltd., Sony Mobile Display Corp. and Toshiba Mobile Display Co.
INCJ will hold 70 percent of Japan Display’s shares and the three companies 10 percent each.
“The purpose of this integration is to survive in the increasingly competitive global market,” said INCJ President Kimikazu Nomi.
“It is a market that Japanese makers can dominate with their advanced technologies. This is a once-in-a-lifetime opportunity,” Nomi told a news conference in Tokyo.
Sony, Toshiba and Hitachi plan to fully integrate their subsidiaries by next spring and aim to increase their combined sales from a projected ¥570 billion in fiscal 2011 to ¥750 billion in fiscal 2015. Japan Display will aim to become a listed company in fiscal 2015, which ends March 31, 2016.
The small and medium-size LCD market is projected to post annual growth of 21 percent on average between 2010 and 2015, thanks to surging demand for smartphones and tablet computers. Sales are forecast to expand from ¥1.6 trillion to ¥4.2 trillion during that period.
Executives from the three electronics makers believe the new company will be able to dominate overseas firms, especially increasingly competitive Asian rivals such as Samsung.
As the technology of small and medium-size displays is rapidly advancing, “it is important to make steady investments in research and development, as well as in facilities to keep leading the market,” said Toshiba President Norio Sasaki.
The investment from INCJ and “the economies of scale we’ll achieve by combining forces . . . are necessary to continue to compete globally, which is why Toshiba decided (to join the deal),” Sasaki said.