October 17, 2011
Innovation Network Corporation of Japan (INCJ), Hitachi, Ltd., Sony Corporation and Toshiba Corporation announced on August 31 that they have signed a memorandum of understanding to integrate their small- and medium-sized display businesses into a new company named Japan Display K.K., to be operated by INCJ. Legally binding agreements are expected this Fall, with business integration to be completed in the Spring of 2012, subject to any required government approvals.
Basic Shareholder Interests in Japan Display
Hitachi, Sony and Toshiba’s operations are currently managed by their subsidiaries Hitachi Displays, Ltd., Sony Mobile Display Corporation and Toshiba Mobile Display Co., Ltd. respectively. All issued shares and other assets of these subsidiaries are to be transferred to Japan Display. INCJ, as a public-private partnership that provides financial, technological and management support for next-generation businesses, also plans to invest a total of 200 billion yen in exchange for shares. INCJ eventually expects to hold 70% of voting shares, with Hitachi, Sony and Toshiba each holding 10%.
The global market for small- and medium-sized displays is expected to grow rapidly due to strong demand for high-resolution, high value-added products, particularly smartphones and tablet computers. Superior high-resolution display technologies will be the key to competitiveness and long-term success, and Japanese companies are world leaders in this area. Other small- and medium-sized display manufacturers have already announced significant investment plans as part of strategies to capture share in this market.
Japan Display is expected to implement the world-leading high value-added technologies possessed by the three subsidiary companies and, by making efficient use of existing production capabilities, improve its cost competitiveness. It will also establish new production lines utilizing the capital provided by INCJ. It is believed this approach will help to solidify its position as a top global company and enable it to meet the demand for high value-added products in the international market.
To maintain its competitive edge, Japan Display is also expected to invest in the world’s most advanced research and development. This investment will focus on the creation of high-potential next-generation technologies, including higher resolution and thinner organic light-emitting diode (OLED) displays, in an effort to drive forward the market as a whole.
While Japan Display is to absorb many of the technologies and assets of the three subsidiaries, its management will be newly hired, with INCJ leading the selection process. INCJ will, however, work with Hitachi, Sony and Toshiba to appoint Japan Display’s outside directors and also to provide technical support. Through this approach, the four parties intend to establish a strong governance framework and business infrastructure for the company.
“This is a landmark project for INCJ in our mission to make impactful, long-term and hands-on investments to grow next-generation businesses worldwide in the spirit of open innovation,” said Kimikazu Noumi, President and CEO of INCJ. “The new company will become a leading small- and medium-sized display manufacturer, and by pooling compelling technological know-how, will be positioned to win in a competitive and lucrative global growth market that has a real impact on the quality of people’s everyday lives.”
These sentiments were echoed by CEOs Howard Stringer of Sony Corporation, Norio Sasaki of Toshiba Corporation and Hiroaki Nakanishi of Hitachi, Ltd., who each pledged the full support of their respective organizations to ensure the success of the new venture. As well as helping to expand the display market, the new enterprise will provide a highly welcome boost to the Japanese electronics industry at a critical time.
Basic Business Strategy of Japan Display
