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LCD Panel Business Merger for Toshiba, Sony, Hitachi

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Toshiba, Hitachi and Sony combined controlled 21.5% of the global market in 2010. (Photo: Yasin Ozturk)
Toshiba, Hitachi and Sony combined controlled 21.5% of the global market in 2010. (Photo: Yasin Ozturk)


  • Toshiba, Hitachi and Sony combine LCD panel businesses
  • Merger gives access to $2.6 billion of government money and will be operated by Innovation Network Corporation of Japan
  • New entity, Japan Display, set to become world’s biggest small and medium-sized LCD manufacturer

Toshiba, Sony and Hitachi are forming a new partnership to make liquid crystal displays for smartphones and tablet PCs. The new entity, which will be known as Japan Display, will be run by the Innovation Network Corporation of Japan (INCJ), and will draw on $2.6 billion of government money to help stand up to growing competition from rivals in Taiwan and South Korea.

Terms for the joint venture are expected to be finalized by spring 2012, and the new company is expected to leap ahead of Sharp and Samsung to become the largest manufacturer of small and medium-sized LCD panels worldwide.

In 2010, the three companies controlled some 21.5% of the global market between the three of them. This compares to 14.8% for Sharp and almost 12% for Samsung, according to market research firm DisplaySearch.

The three Japanese tech giants were initially hesitant to take on the big guns of the LCD world, with competition tougher than ever. Sharp is expected to benefit from a $1 billion Apple investment and South Korea’s Samsung and LG have exclusive supply contracts with major manufacturers.

In addition to this, analysts have suggested that prices are soon likely to drop. "We will probably see oversupply in the near future. It is not a business that will likely provide stable profits in the mid- to long-term," said Shigeo Sugawara, senior investment manager at Sompo Japan NipponKoa Asset Management.

Next-Generation LCD Panels

Japan Display will concentrate on building next-generation LCDs with thinner, higher resolution LED displays. First, however it will need to decide how to integrate the two different display technologies used across the three businesses.

Sony, Toshiba and Hitachi have signed a memorandum of understanding, and a definitive, legally binding contract is expected to be signed later in the year. INCJ will become a 70% stakeholder of Japan Display with the three firms each holding 10%.

Up until last year, the three firms were suffering losses in the LCD segment. Spinning off their panel businesses will allow them to concentrate on their stronger suits, which will be welcome news in the wake of the earthquake and tsunami that has hindered production across the board.

Last month Sony posted a net loss of 15.5 billion yen ($199 million) in the second financial quarter, comparing to a 25.7 billion yen profit for the same period the previous year. Profit forecasts for 2011 earnings have also been slashed by 25% to 60 billion yen.

Meanwhile, Hitachi is looking to outsource all TV production operations to foreign companies, following an 86% dive in first quarter revenue. Toshiba is also bringing forward plans to downsize its chip business.

Key Statistics – Global LCD Display Market

  • In 2011, global shipments for large LCD displays will grow 14%, compared to over 23% in 2010 and around 21% in 2009. (source: IHS iSuppli Research)
  • Shipments of large LCD panels in 2011 will jump to 740 million units, compared to 649 million last year. (source: IHS iSuppli Research)
  • By 2014, the next-generation LCD market will be worth an estimated $17 billion (source: MarketsandMarkets)
  • In 2014, around 42% of global revenue will come from Asia. (source: MarketsandMarkets)
  • The global LCD market will grow at an estimated rate of 20% per year until 2014. (source: MarketsandMarkets)

By James Mulholland for
James Mulholland is a Paris-based internet and broadcast journalist specializing in sports, current affairs and technology news, while also freelancing as a photographer.

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