Japan Display Secures ~$0.92 Billion Bailout from Japan’s Ichigo

In recent weeks, Japan Display Inc. (JDI), which absorbed LCD production of Sony, Hitachi, and Toshiba in 2011, has been losing money, has most of its business with Apple. Sales have been dropping of late, to the point of putting the company in jeopardy. Late last week JDI inked a deal to get up to ¥100.8 billion JPY (USD$918.87 million) from Ichigo Asset Management, a Japanese investment company. To that end, the company terminated its memorandum of understanding with Suva Investment Holdings, a group of investors from China and Taiwan, it signed last year to get $715 million.

Under the terms of the deal, Ichigo will invest in Japan Display in and will eventually gain control of the company. The Innovation Network Corporation of Japan (INCJ), which currently controls JDI, will lose control but will retain a stake in the company. Stakes of other investors of JDI will get lower.

Japan Display, which absorbed LCD production of Sony, Hitachi, and Toshiba in 2011, has been losing money for years because until recently it only offered IPS LCD display panels and therefore had to compete against numerous companies from China with lower costs. To make the matters worse, JDI earned over 60% of its revenue selling displays panels to one customer, Apple. JDI’s sales dropped from ¥884.440 million in FY2017 to ¥636.661 million in FY2019. JDI’s OLED division, JOLED, yet has to become a viable player on the market. At present, JOLED’s screens are only used by Apple’s Watch, whereas OLED screens for iPhones are supplied by other companies. To date, JDI owes Apple more than $800 million.

Last year INCJ signed a memorandum of understanding to sell 49.82% of Japan Display for $715 million to Suwa Investment Holdings LLC, a conglomerate of investors consisting of China’s Silk Road Fund and Harvest Tech Investment Management, Taiwan’s TPK Holdings, and Fubon Financial Holdings. Under the terms of the new deal, JDI will get more money, whereas INCJ will retain a higher stake in the company.

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Sources: Japan Display, Reuters