JDI to Assume Control of JOLED in Life or Death Struggle to be a Player in the Future of OLEDs
December 22, 2016
In July 2014, only a few months after the Japan Display listing, the INCJ formed JOLED (operations started on 1/1/2015), combining the OLED assets of Sony, Panasonic and Japan Display. The INCJ held a 75% stake in the new entity, with Japan Display holding 15% and both Sony and Panasonic 5% each. According to the Japanese press, JDI invest an additional $100m plus $650m from the INCJ to grow both its LCD and OLED businesses, thereby raising its stake in JOLED from 15% to 50% by the end of next year through purchases of INCJ shares. The original slit is responsibilities made little sense in that JDI was to work on small/medium, primarily LCDs, while JOLED would work on medium size displays using OLED technology. But the world shifted on JDI, when Apple contracted with Samsung to provide OLED panels for the iPhone 8, the iPhone 7 sales were poor and JDI suffered extraordinary losses. So JDI was brought kicking and screaming in the world of OLEDs and started to conduct R&D on the JOLED facility. JOLED had inherited a Gen 4.5 from Panasonic, which included Panasonic’s one of a kind, ink jet printer in Ishikawa. JOLED has 260 employees and is run by Nobuhiro Higashiiriki, who was the former President and Chairman of the Japanese division of Israeli-based yield management tool vendor Orbotech (ORBK). The pilot line, with a 2K capacity was expected to start producing samples by 2Q 2017. JOLED apparently had plans for constructing in 2 phases two phases, a Gen 5.5 LTPS based OLED production line that is expected to be in operation by 2Q 2018 and fully built out by March 2019. The fab is slated to have capacity for 15,000 sheets/month when both phases have been completed, which (unyielded) is the equivalent of ~ 7.7m 5.5” smartphones/quarter.
It makes sense for the two companies efforts on OLED to be combined to reduce the duplication and improve the productivity. Samsung has already demonstrated that it is possible to build smartphone, notebook and tablet OLED displays using the same process and a Gen 6 is more efficient than a Gen 5.5. However, the messaging out of Japan has been horrible:
- First, JDI said it couldn’t survive without an influx of capital
- Second, the Abe government said that it didn’t think it made sense to throw money at a commodity business
- Then, JDI’s CEO and the CTO said they were investing in LCDs because that technology could outperform OLEDs.
- Meanwhile, JOLED said nothing and Sharp (Foxconn) said they wanted to join forces with JDA
- Sharp then said they would build their OLED fab in China, because the Chinese government provided subsidies
- And now, JDI and JOLED are merging, with the Japanese government footing the bill
It seems that politics won and the 1,000 + jobs from JDI and JOLED needed to be saved even if they are risking competing with Samsung and LG, who are light years ahead in terms of flexible small/medium displays, which is what Apple and the Chinese smartphone OEMs want. The chances against success in Japan are overwhelming!