Japanese LED industry shakeout reflects shifting fortunes
In a positive move, Joled Inc. a company established by the Japanese government-affiliated investment fund Innovation Network Corp. of Japan (INCJ) is planning to start producing 10- to 20-inch organic electroluminescent display panels for laptop and tablet computers in 2017. But on a more negative path is Japanese electronic manufacturer Sharp which is looking to shut down as many four of the company’s component manufacturing plants including three LED plants.
INCJ, which is public-private partnership between the Japanese government and 19 major corporations, has a 75 percent equity stake in Joled in terms of voting rights. Of the remaining stake, 15 percent is held by Japan Display, and five percent each is held by Sony and Panasonic Corp.
Joled is aiming to raise an investment worth tens of billions of Yen to develop the OLED panels by 2016 and is looking to build a Yen100 billion plant somewhere in Japan. To generate funds for construction, Joled is considering going public or seeking business integration with major LCD-maker Japan Display Inc.
While Joled is planning for expansion Sharp has revealed plans to restructure the company’s electronic component business which will include the potential shutdown of three LED plants. Closedown of the Mihara electronic component plant will be completed by the end of 2015 and Sharp is evaluating the possiblility of shutting down three plants located in Fukuyama.
Sharp had forecast the company would bounce back to profitability in 2014 and was predicting a gross profit of 30 billion Japanese Yen ($250 million) for its latest fiscal year but in the company’s latest financial report it actually posted a net loss of the equivant value. Further losses are expected in 2015 following the sell off of Sharp’s solar cell business at a discount price.
Sharp’s lower revenues in 2014 have been attributed to poor display sales as well as pursuing the wrong business strategies. Sharp launched a number of TV models in the U.S. market but failed to gain sales traction while the company’s 4K2K TV sales in the Japanese domestic market were also lower than expected.
In addition, Sharp’s attempts to capture Chinese manufacturer Xiaomi smartphone display orders also fell flat. A price war with Japan Display and other rivals also drove down display retail prices and have hit Sharp’s revenues.
To make matters worse, the tablet display market, which was projected to show strong growth in 2014 was a damp squib in reality. The company had targeted on growth in small to mid-sized flat panel sector but has seen prices in that market drop annually by more than 20%.
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