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Home / Business / iPhone display provider sees OLED smartphone deluge from 2021

iPhone display provider sees OLED smartphone deluge from 2021



(Bloomberg) – Japan Display Inc., the weak mobile display supplier for Apple Inc., claims to have about a year to decide whether to use the next generation of organic light emitting displays.

While OLED panels are leaner, more energy-efficient and more contrast-rich, JDI's liquid crystal displays maintain a price advantage that will make them competitive on smartphones by 2021, Minoru Kikuoka, the company's new CEO, said in an interview. He believes that a more determined transition to the new technology will be made during this time, and does not respond to plans from specific customers.

When Apple launched its first OLED iPhone in 2017, this was considered the beginning of the end for the LCD's long reign. For Japan Display, which relies a large part of its sales on Apple, this meant trouble as the company lagged behind in developing the new screens. However, the iPhone X, which used an OLED display from Samsung Electronics Co., did not sell as well as expected, and Apple relied on an LCD-based addition to its range of products with the iPhone XR a year later, which made life difficult for the Japanese gave companies some leeway.

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As the smartphone market reaches a plateau and can no longer meet the demand of users already satisfied with their existing devices, that's value for money Relationship up again "We see consumers placing more emphasis on affordability for their smartphone preference," said Kikuoka. "The industry is now gaining new recognition for the price competitiveness of LCDs."

Apple's 2019 phone range includes an LCD model – the Apple iPhone 11, which was priced at $ 50 less than its predecessor – and the company plans to enter in the first half of next year add second iPhone to replace the outdated iPhone 8. The company based in Cupertino, California, however, may be fully switch to OLED for new phones already in 2020. Some older LCD models are still selling, the time for Japan Display expires.

After JDI repeatedly pushed back its mass production of its own OLED screens, JDI is on the verge of bringing its first OLED product to market, Kikuoka said, adding that it will not be a smartphone screen. A person familiar with the matter confirmed in an earlier report that JDI's first OLED is being used in the Apple Watch. The competition in the field of mobile phones would cost billions of dollars in additional investment, money that Japan Display does not have.

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"There was a time when we felt the need to move fast switch to OLED, "said Kikuoka. "Without a partner who could engage on the capital side, we just can not do that."

Composed of the remnants of numerous troubled Japanese display manufacturers in 2012, JDI has disapproved of large investments in LCD capacity and had difficulties fight better competition from South Korean and Chinese rivals. Five years running losses have sent it looking for an overseas capital injection, but the list of potential candidates has continued to shrink. When Kikuoka took the helm in September, the company had just reached a new low and warned that it could have trouble continuing its business if it could not raise new capital. China's Harvest Tech Investment Management Co. withdrew from its rescue plan , This was the last blow since June when Cosgrove Global Ltd., Topnotch Corporate Ltd. and Taiwan's TPK Holding Co. left a consortium that approved an infusion of $ 117 billion ($ 1.1 billion) in April. JDI still expects to receive an investment from Oasis Management Co. and intends to raise a total of 50 billion yen by the end of the year. An unnamed customer who was previously reported to be Apple could bring $ 200 million.

Chinese screen manufacturers BOE Technology Group Co. and Tianma Microelectronics Co. had also shown interest in JDI's OLED technology, but both have since focused on developing their own versions. Kikuoka said that a real success story in the mass production of OLED panels could bring these companies back to the table in the future. A joint venture in Japan Display's central Japanese Hakusan plant would be the easiest way, but exporting manufacturing know-how to China would also be an option. JDI could also be open to offers from private equity and other sources of finance.

Kikuoka, 57, spent the first part of his career in finance with stops at the Industrial Bank of Japan Ltd. and Merrill Lynch. After more than a decade with electronics suppliers Nitto Denko Corp. and Nidec Corp. In 2017 he moved to the finance department of Japan Display. In May, he was appointed Chief Financial Officer before rising to top position last month.

August, Japan Display reported quarterly revenues at its lowest level since the IPO in 2014, as demand from smartphone makers grew in the near future with no prospect of recovery. The company has laid off around 1,200 employees under a voluntary pension plan, sold some display equipment, and discontinued production at one plant.

Over-investment in factories at the height of the demand cycle is just one of the causes of JDI's current development. According to Kikuoka, the need is high. The company also became a victim of complacency, as it is owned by Innovation Network Corp. from Japan, a state-owned fund that remains the largest shareholder in JDI.

"That led to a culture that allowed losses to persist and felt like someone would do it. Always come to our rescue," he said. "What was missing was a true hunger for aspiration."

– With support from Mark Gurman.

To contact the reporters about this story: Pavel Alpeyev in Tokyo at [email protected]; Yuki Furukawa in Tokyo at [email protected]

To contact the editors responsible for this story: Edwin Chan at [email protected], Vlad Savov, Colum Murphy

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