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Japanese firms merge LCD units
Source: Agencies |
September 1, 2011, Thursday
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Print Edition
Print Edition
JAPAN'S Sony Corp, Toshiba Corp and Hitachi Ltd will merge their liquid-crystal display operations using US$2.6 billion of government-backed funds to fend off growing competition from rivals in South Korea and China's Taiwan.
The merger will create the world's largest maker of small panels used in smartphones and tablet PCs, leapfrogging global leaders Sharp Corp of Japan and Samsung Electronics of South Korea.
The move would help the firms focus on their main operations. But the 90-percent government-owned fund could come under fire for using public money to prop up a volatile business in its biggest investment to date.
The Innovation Network Corp of Japan will invest about 200 billion yen (US$2.6 billion) in the merged unit, taking a 70 percent stake. Sony, Toshiba and Hitachi will each take a 10 percent stake, the three firms said yesterday.
They aim to complete the merger by the spring of 2012. A shakeup has been long overdue because falling panel prices and advances in technology have placed ever increasing demands on producers.
The three firms together controlled 21.5 percent of the market for small- and medium-sized displays last year, larger than Sharp with 14.8 percent or Samsung Mobile with 11.9 percent, research firm DisplaySearch estimates.
All three had hesitated about investing in a new line to compete against Sharp, which is due to receive a US$1 billion investment from Apple Inc, or South Korean rivals LG Display and Samsung Mobile Display, which have supply agreements with key clients.
Sony has been weighed down by chronic losses in its TVs, Toshiba is speeding up plans to shrink its chip business, while Hitachi has been looking to distance itself from the volatile panel business to focus on infrastructure operations.
"Sharp is especially aggressive, and those who don't have a strong customer base may struggle, given that only a handful of smartphone and tablet makers are doing well," said Nam Dae-jong, an analyst at HI Investment & Securities.
With more panel makers shifting focus to small-sized markets to meet demand from smartphone and tablet PC makers, he and other analysts predicted the industry would be oversupplied next year.
"It's not a business that will likely provide stable profits in the mid- to long-term," said Shigeo Sugawara, a senior investment manager at Sompo Japan NipponKoa Asset Management.
How the three firms, which use two different types of display technology, will merge operations is unclear.
The merger will create the world's largest maker of small panels used in smartphones and tablet PCs, leapfrogging global leaders Sharp Corp of Japan and Samsung Electronics of South Korea.
The move would help the firms focus on their main operations. But the 90-percent government-owned fund could come under fire for using public money to prop up a volatile business in its biggest investment to date.
The Innovation Network Corp of Japan will invest about 200 billion yen (US$2.6 billion) in the merged unit, taking a 70 percent stake. Sony, Toshiba and Hitachi will each take a 10 percent stake, the three firms said yesterday.
They aim to complete the merger by the spring of 2012. A shakeup has been long overdue because falling panel prices and advances in technology have placed ever increasing demands on producers.
The three firms together controlled 21.5 percent of the market for small- and medium-sized displays last year, larger than Sharp with 14.8 percent or Samsung Mobile with 11.9 percent, research firm DisplaySearch estimates.
All three had hesitated about investing in a new line to compete against Sharp, which is due to receive a US$1 billion investment from Apple Inc, or South Korean rivals LG Display and Samsung Mobile Display, which have supply agreements with key clients.
Sony has been weighed down by chronic losses in its TVs, Toshiba is speeding up plans to shrink its chip business, while Hitachi has been looking to distance itself from the volatile panel business to focus on infrastructure operations.
"Sharp is especially aggressive, and those who don't have a strong customer base may struggle, given that only a handful of smartphone and tablet makers are doing well," said Nam Dae-jong, an analyst at HI Investment & Securities.
With more panel makers shifting focus to small-sized markets to meet demand from smartphone and tablet PC makers, he and other analysts predicted the industry would be oversupplied next year.
"It's not a business that will likely provide stable profits in the mid- to long-term," said Shigeo Sugawara, a senior investment manager at Sompo Japan NipponKoa Asset Management.
How the three firms, which use two different types of display technology, will merge operations is unclear.
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