After the world entered the age of LCD panels, Japanese companies were the first kings, such as Sharp, NEC, and Toshiba. Now, South Korea's Samsung and LG occupy the world's number one and two positions, respectively, and Japanese companies' living space is compressed. What is even more brutal is that Japanese companies also face the challenge of Chinese companies (including Taiwanese companies). So, how did the Japanese display panel industry die out?
Sanyo and Seiko Epson entered the LCD panel industry in 2004. In 2006, Sanyo Electric transferred shares to Epson and withdrew from the industry. Epson withdrew LCD panel manufacturing in 2012.
Japan NEC shut down its Kagoshima LCD panel factory in 2009. In 2011, it sold 70% of the company's shares in the production of small and medium-sized LCD panels to China’s Shenzhen Tianma Group and withdrew from LCD panel manufacturing.
On December 27th, 2011, Sony and Samsung reached an agreement that Samsung paid approximately 1,080 billion won (935 million U.S. dollars) in cash to acquire 50% of all Sony-owned S-LCD companies (Sony and Samsung's joint venture LCD panel company). Through the acquisition, Samsung will wholly own the S-LCD company, and Sony will also withdraw from LCD panel manufacturing.
Remember, since 2011, all panels of Sony LCD TVs have been bought by others.
Mitsubishi Electric also withdrew from LCD panel manufacturing in 2014.
Sharp's huge investment in plasma technology in 2008, committed a wrong direction, coupled with the drag on solar energy business, gradually decline, and was acquired by Hon Hai Group in 2016. Hon Hai has decided to set up its factory in Guangzhou, China, and transfer technology and manufacturing to China.
For the remaining Japanese companies, Toshiba, Sony, and Hitachi consolidated their LCD panel manufacturing equipment business in April 2012 to form Japan Display Corporation (JDI). At the same time, Toshiba withdrew its LCD business in 2012, and Hitachi withdrew from LCD business in 2016.
The JDI together with these three companies is also Japan's INCJ (Industry Innovation Agency), which is an investment fund with an official background in Japan. It is just as well understood as China's government industry fund.
As a result, JDI became the only company in Japan that still produces display panels on a large scale.
Loss of JDI, who will save?
JDI is in a high-end position in terms of LCD panels for mobile phones. When China's mobile phone brands released new flagship mobile phones, they would absolutely say that my screen is to buy Japanese JDI to demonstrate their quality and high-end.
For example, in the hammer and millet conference in 2014, everyone will have a look and they will know that they have used the JDI screen full of pride.
However, in fact, JDI has been operating poorly since its establishment, and has suffered losses for the three consecutive years from April 2014 to March 2015, April 2015 to March 2016, April 2016 to March 2017.
In November 2016, JDI continued to lose money in the 2016 fiscal year semi-annual financial report announced by JDI, and announced plans to lay off 4,700 employees, equivalent to 30% of the total number of employees.
Why did such a result occur? Because JDI's LCD panel technology is at the high end, Samsung is the main competitor in the high-end segment. As Samsung first introduced the OLED panel and led the generation in technology, the mainstream high-end Android smart phones in the market turned to OLED in 2016. Samsung has achieved a monopoly on OLED mobile phone panels, and it is natural for JDI to suffer the most.
In addition, JDI is highly dependent on Apple, and Apple's mobile phone, which accounts for half of JDI's sales revenue, was sluggish in 2016. As a result, JDI suffered not only a huge loss last year, but also cut 30% of its employees and 4,700 people lost their jobs.
To make matters worse, the iPhone, the pillar of JDI's profit, was also announced in 2016: The next generation of iPhones (iPhone 8) will use OLED panels.
Apple at this time was actually looking forward to JDI. If JDI can achieve mass production in 2017 and provide OLED screens, I believe Apple will continue to cooperate. However, the following facts prove that JDI is too slow to realize mass production of OLED technology in 2017, causing Apple to completely die for JDI, and finally choosing Samsung as the sole supplier of screens.
In the case of internal and external problems, JDI even released a news report at the end of 2016 saying that the Shiroishi plant in Ishikawa Prefecture should be opened at the end of December, citing an increase in orders from LCD panel makers from Huawei and OPPO.
In fact, the factory should have been commissioned by the end of June, and JDI has been delaying its use because it fears that it will start depreciating the plant once it is started.
In 2016, Huawei, OPPO, vivo, and other high-end smart phones of China's first-tier manufacturers are all turning to OLED screens. Why did JDI suddenly announce the opening of this factory? The reason is that in the fourth quarter of 2016, the order of Chinese mobile phone brands to JDI increased, but this is because the OLED screen is out of stock. This is a frustrating choice and it is not sustainable.
JDI does not seem to realize how serious his crisis is.
In April 2017, Digitimes reported that Apple had already placed a two-year OLED screen order with Samsung. The value was as high as US$9 billion. Once the iPhone 8 was launched in the fall of 2017, the sales volume of the previous generation iPhone 7 may decline significantly. JDI will gradually fade out of Apple's supply chain. This will be a cliff-breaking fall for JDI, which is highly dependent on Apple (50% - 60% revenue from Apple).
Discarded by Apple
In fact, Apple is also avoiding Samsung's dominance. According to the report of the Korea Economic Daily on July 28, 2017, Apple decided to invest approximately 2.7 billion U.S. dollars in LG's OLED panel production line. This investment will be used as an advance payment for LG's OLED panel orders.
It is estimated that from 2019, Apple will receive 45,000 6.5-generation OLED panels every month from LG. That is, Apple is proposing LG as the second supplier.
Apple will invest heavily in the suppliers it chooses. For example, the LCD panel factory built by JDI for the iPhone 7 launched in 2016 will receive an investment of 200 billion yen.
Due to the loss of iPhone 8 orders, the major high-end mobile phone brands also turned to OLED. In August 2017, JDI announced that on the basis of the reduction of 30% in the previous year, it continued to lay off more than 3,500 to 4,000 people, accounting for more than 30% of the total number of employees, which was equal to about 50% of total layoffs.
It stands to reason that JDI should invest in OLEDs as soon as possible, but it is a pity that one lacks technology and two lacks funds.
technical problem
The first is technology, JDI itself is the strength of the LCD panel, JDI is indeed in the LCD panel technology is at a first-class level, which is why Apple iPhone 7 and previous models use JDI panel.
However, in the era of OLED, JDI had no technical advantage, and the mass production schedule lags behind South Korea and China. At present, there are only two panel manufacturers in Japan, JDI and JOLED, JOLED is the integration of Sony, Panasonic's OLED panel business, and accept the INCJ, JDI shares listed in the OLED panel company in 2015, now INCJ holds a 75% stake in JOLED, JDI, Sony and Panasonic hold 15%, 5% and 5% equity respectively.
JOLED is mainly engaged in the research and development of OLED, but it has not yet achieved mass production. JDI is the only large-scale LCD panel manufacturer in Japan (not Sharp).
Therefore, in order to complete the OLED R&D and mass production as soon as possible, JDI has attempted to merge JOLED to concentrate its efforts against China and South Korea. JDI announced on December 21, 2016 that it will acquire a portion of JOLED's equity from the National Bureau of Industry and Finance Industry Reform (INCJ). JOLED's shareholding increased to 51%, and Nasdaq ranks among its subsidiaries.
However, in June 2017 news, JDI announced that the date of the signing of the share purchase was postponed from the end of June 2017 to the end of June 2018. The time for completing the acquisition was changed from the originally planned late December 2017 to “undecidedâ€. .
In other words, when JDI completes the acquisition of JOLED, it will probably wait until 2019 for the complete acquisition of OLED technology. Even in 2017, Korean OLED panels have been mass-produced for more than three years, and BOE's OLED is also in volume production in 2017. After two years of waiting for JDI, the rhythm is too slow to keep pace with the competition needs of the times.
More importantly, JDI's leadership does not seem to have too strong a sense of crisis. In the company's continuous loss, the two consecutive layoffs in 2016 and 2017 were 30% critical. On August 22, 2017, JDI announced such a thing. : After the OLED panel mass production technology is planned to be established in the middle of 2019, it will begin the authorization business in the second half of 2020 or 2021.
JDI President and CEO Jiro Ichibo expressed confidence: "With JDI's superior panel drive technology, we believe that the new OLED technology will be able to fully differentiate itself from competitors."
Even if JDI completed the OLED mass production on schedule in 2019, it would have been two years behind China and four years behind South Korea’s Samsung. Even worse, the president of JDI actually said that it will only begin to authorize outside the country in 2021. This fully demonstrates the blind confidence and slowness of Japanese people's own technology, and to whom is your OLED technology licensed by 2021?
Samsung's technology is the strongest, certainly will not buy you, then even the first-line manufacturers in China have been mass production for four years, why buy a few years ago your technology? Obviously, the progress of mass production of OLEDs has lagged behind China and South Korea. What is JDI's confidence that the technology currently being developed will be re-authorized by 2021 and will someone else buy it? The outlook is really not optimistic.
funding problem
The other issue is capital. Investing in OLED factories is invested in one billion U.S. dollars. For example, BOE’s sixth-generation OLED plant in Chengdu, Sichuan Province, was put into operation in 2017 and the amount was 46.5 billion yuan, which was more than 6 billion U.S. dollars. The sixth-generation OLED plant invested by BOE in Mianyang, Sichuan, will be put into production in 2019, and the amount is also 46.5 billion yuan, more than 6 billion US dollars. Samsung, LG investment in OLED panel production line is not a unit of one billion US dollars.
With such a large-scale investment, JDI's own funds simply cannot afford to bear. INCJ, the major shareholder industrial innovation agency, claimed to provide 75 billion yen (about 635 million U.S. dollars) in financial support at the end of 2016, but in the end it only gave 50 billion yen ( 425 million U.S. dollars). This is only a glass of water, it is impossible to support the construction of OLED factories.
At present, the Japanese government lacks the determination and will of the nation to support JDI. With JDI's own financial strength, it cannot mass-produce OLEDs in a short period of time. In short, the Japanese panel industry is currently suffering from internal and external problems, the technical progress is slow, and the problem of fund construction has not been solved so far.
According to the current progress, even if mass production is completed in 2019, the problem of funds for construction will not be solved. The scale of mass production will certainly not be comparable to that of China and South Korea, and it will not be able to dilute the cost. This is still at a disadvantage in the competition.
After September 2017, Apple’s production capacity will shift to the iPhone 8 on a large scale, and JDI’s orders for LCD panels will decline further. It is uncertain whether JDI can sustain until 2019. In 2016 and 2017, it will lay off 30% for two consecutive years. This means that JDI has reduced its employees by 50% in two years in order to survive.
In March 2016, JDI had 15,700 employees worldwide. By March 2017, there were only about 13,000 people left. After the layoffs this year, it is estimated that there will be only 9,000 employees left in the world. Of the 7,000 people laid off in 2016 and 2017, there are only about 900 employees in Japan, and the other 6,000 people who were laid off are all JDI's overseas employees. JDI is also trying to protect Japan’s local employment. After the completion of the layoffs this year, the number of JDI employees in Japan will drop from 5,702 in March 2016 to around 4,800.
Sell ​​yourself?
According to the report of the Industrial News of Japan on August 8, 2017, JDI estimates that the loss for the 2017-2018 fiscal quarter will reach a record 200 billion yen (about 12 billion yuan), far exceeding the 31.6 billion yen for the previous year. Yuan, JDI In the case of INCJ will not continue to provide financial assistance, in addition to this measure of layoffs of 30%, it is already seeking to sell shares.
China Tianma Microelectronics Co., Ltd., a Chinese panel maker, has proposed a funding proposal for JDI, while BOE and CSOT have also reportedly contacted JDI. It is said that Tianma Microelectronics and other Chinese companies have proposed to JDI to consider the acquisition of a 35% stake in JDI held by the "Industrial Innovation Agency (INCJ)" of the Japanese government-government fund.
In addition, JDI also started to explore the feasibility of conducting capital business cooperation with domestic and foreign companies and investment funds, and will decide on cooperation partners in 2018.
In other words, JDI has embarked on the same "sale no return" as Sharp and Toshiba, and another Japanese company is dying.
However, the significance of JDI to Japan is that this is the last hope of the Japanese display panel industry. Once JDI is bankrupt, the remaining JOLED cannot support Japan's display panel industry. JOLED's technology is still in the R&D stage. There is no large-scale supply panel to the market. There are only about 230 employees, most of whom are technicians. The registered capital is only 8.1 billion days. Yuan, which is 500 million yuan.
Once JDI with factory buildings, land, and manufacturing processes goes bankrupt, JOLED loses its joint target, and the Japanese display panel industry has basically declined.
In fact, JDI has caused other Japanese companies to swallow a lot of bitter fruits. Since JDI can only provide small and medium size panels, which are used for smart phones and tablet computers, basically no large panel manufacturing is involved. This has led to the fact that all Japanese LCD TV manufacturers are now buying screens in Korea, Taiwan and China.
For example, domestic users have been saying that Sony Dafa is good, LCD TV's cost is 60% from the screen, and Sony TV is currently the largest TV brand manufacturer in Japan. Where does its screen come from? According to IHS data, 29% of Sony LCD TVs were from LG in 2016, 27% from Samsung, 27% from AUO and 15% from BOE. Yes, Sony TV actually uses 15% of BOE's screen.
The Sony 4K TV launched in 2013 uses the screen of Taiwan’s AUO. OLED TV is the basic use of LG's screen. Panasonic is also the same, the screen basically comes from two, South Korea LG and Taiwan Friend. Maybe netizens still remember the Sony Z9D 100-inch LCD TV made by Wang Sicong Weibo. JDI doesn't ship 100-inch LCD panels at all, so Sony should use LG or Taiwan Innolux's panels.
Japan lost its large-size panel manufacturing capabilities, which directly brought a huge negative impact on Japanese brand companies.
Take Sony TV as an example. In 2014, it was the third largest TV brand in the world. In 2015, its shipments fell by 19.3%. In 2016, the decline in shipments, although significantly narrowed, was still 3.7%. In the past year, it was surpassed by the Chinese TV brands Hisense and TCL. In 2016, its shipment volume was only 11.7 million, which dropped to the fifth place in the world.
Which is the top TV brand in 2016? Samsung, the global leader in display panel technology, sold 47.9 million units, almost 4.5 times that of Sony.
In the past ten years, Japanese display panel companies have fallen one by one. For the entire display panel industry in Japan, JDI is already the only remaining straw.
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