Business / Corporate

Japan Display might crank out next-gen OLEDs at Ishikawa plant, Lee says

Kyodo

Japan Display Inc. is exploring the idea of mass producing next-generation organic electroluminescent panels for smartphones at a domestic plant, the CEO of a China-Hong Kong consortium bailing out the troubled Apple Inc. supplier says.

Winston Lee, CEO of Suwa Investment Holdings LLC, said making the OLED panels at JDI’s Hakusan plant in Ishikawa Prefecture will allow the product to hit the market within 2½ years.

“To build a full OLED production plant in China will take three to four years before the product comes off the line. To build in Hakusan, it may take only 2 to 2½. The cost at Hakusan would be half or less,” Lee said in a recent interview in Tokyo.

“We don’t have three or four years to wait for JDI’s OLED to reach the market. Our major customer cannot wait that long,” Lee said. “The market changes rapidly, the Chinese OLED manufacturers will eventually catch up.”

Japan Display agreed earlier this month to receive a capital injection of up to ¥80 billion ($752 million) from Suwa Investment, a consortium of China’s Harvest Tech Investment Management Co. and Hong Kong’s Oasis Management Co.

Under the bailout deal, which will make Suwa a major JDI shareholder, Lee was nominated as a director and is set to join JDI’s board, pending shareholder approval.

State-backed turnaround fund INCJ Ltd. is currently JDI’s biggest shareholder with a stake of around 25 percent.

Japan Display sees fast production of OLED panels as the pillar of its growth strategy. In the April-June quarter, it logged a group net loss of ¥83.27 billion and slipped into negative net worth amid falling demand for smartphones. In fiscal 2018, it incurred a group net loss for the fifth straight year, affected by declining demand from Apple.

The maker of liquid crystal display panels for the iPhone XR model is counting on a rise in global demand for OLED displays for next-generation smartphones and TVs. Apple is also expected to provide financial aid through the Chinese investment fund.

Lee was optimistic JDI will have no difficulties funding its revival plans, including the mass production of OLED panels, because of its technological superiority.

“When you are an Apple supplier, it means your product is the best because they take the best product only,” Lee said.

Given the financially restructuring and the capital injection, “There would be investors’ interest in JDI more than ever before,” he said.

Unlike LCD panels, OLEDs do not require a backlight to emit light, allowing them to be thinner and consume less power.

South Korea’s Samsung Electronics Co. is the dominant leader in the market, and many Chinese makers are racing to mass-produce them while ensuring quality.

JDI was established in 2012 by merging the display businesses of Sony Corp., Hitachi Ltd. and Toshiba Corp. with support from INCJ.