Closed eye tightrope? On JDI's conservative attack on OLED panels for 7 years

Since April of this year, the news about Japan Display Inc's “Rescue Plan” has hardly stopped. Some people say that the source of the disaster is because JDI sticks to the LCD panel and does not recognize that the current market is no longer dominated by LCD. It is. But in fact, as early as 2012, JDI decided to use a year to achieve mass production of OLED panels, but why is JDI still spinning in place in the past seven years?

Generally speaking, it is nothing more than the two problems of capital and technology, but sometimes it is too "self-sufficient" and too "successful" will eventually become a chronic suicide.

Repeated mass production plan and zero schedule

In 2011, the Japanese panel industry became increasingly sluggish, and the Japanese government led Sony, Toshiba, and Hitachi to integrate its LCD panel business and established Japan Display Inc.

It can be said that the JDI at the beginning of its establishment was full of ambition.

In 2012, the Nikkan Industry News reported that JDI plans to mass-produce OLED panels in the second half of 2013, mainly for mobile devices such as smartphones. At the time, Japanese media said that JDI plans to expand its OLED panel capacity by about 100 billion yen (about RMB 6.489 billion) to catch up with the Samsung Display, which is the market leader.

At that time, JDI has set up a trial production line at the Mobara Plant and the Dongpu Plant in Japan, and continues to develop OLED panels. Although the Nikkei News has pointed out that JDI's OLED panels will be mass-produced in 2014 at the earliest. But what's interesting is that until 2019, JDI's new CEO, Kikuoka, said that JDI will finally launch its first OLED product.

That's right, it's the first one. JDI is finally launching its results on OLED panels for many years.

What is JDI busy from 2014 to 2019?

In fact, the JDI action that has just been established is very frequent. In 2012, JDI launched a 4.5-inch, 1280x720 OLED panel. In 2013, JDI announced the development of a 5.2-inch Full-HD OLED panel for smartphones with the highest resolution (1920x1080) at the time. At the same time, JDI said it plans to mass-produce in two to three years, and hopes to break the situation dominated by South Korea's Samsung Electronics.

However, in the past two years to 2015, JDI still has no mass production, but it can be seen from Japanese media reports on some local panel factories: panel yield is not good, it is difficult to mass production; OLED demand can be expanded, it is not known, conservative The strategy is more secure; the cost cannot be reduced...

It doesn't matter if there is no progress, because for the market at the time, only Samsung Display and LGD can mass-produce OLED flexible panels. From a global perspective, this market is still in its infancy, and many potential vendors are waiting for the opportunity.

Determined to come, but no strength, no money

Until 2016, as smartphone makers began to switch from LCD screens to OLED screens, JDI's LCD screen orders fell sharply, and the slowdown in iPhone sales made the Japanese display company in a downturn.

In fact, since the listing, JDI has not broken the curse of operating losses. The Japanese government’s minister of economics and economics, Shi Geng Hongcheng, even said that if the JDI, which lost two years, relied on Apple’s orders, the government would not rule out selling shares.

But for JDI, whose half of its revenue comes from Apple's business, relying on Apple seems to be a way to live easier. Although Apple has not indicated that it will use OLED screens on new phones, some analysts predict that Apple's new machine in 2018 may use OLED displays. Similarly, JDI hopes to seize Apple orders and reinvigorate growth in a timely manner.

As a result, JDI announced once again that mass production of OLED panels will begin in 2018. At this time, Samsung is no longer the only one in this field. LG Display and the Chinese panel factory represented by BOE began to divide the market.

At the same time, JDI plans to invest 50 billion yen to set up an OLED panel production line at the Maoyuan plant, which is expected to be launched in the spring of 2017. At the same time, it plans to increase the monthly production to 5 million pieces in 2018, thereby accumulating mass production technology. Against the leading market, Samsung, LGD and other Korean factories.

However, at the time, Nikki Industrial News interviewed the company's panel production plant and learned that JDI still had funding problems in building a complete OLED display panel production line.

In addition, JDI anonymous people also revealed to the Nikkan Industrial News that part of the test production line technology is not suitable for mass production, and is discussing the use of technology similar to Korean manufacturers. But even if it works with other vendors to overcome the difficulties, JDI is still in a dilemma – whether the largest shareholder, the Industrial Innovation Investment Agency (INCJ), and other governments will agree is an unknown.

Although the technology can't be found, the funds can finally be paid. In December 2016, JDI announced that it has received a cash injection of INCJ's 75 billion yen (approximately RMB 4.866 billion) and said it will use the funds to develop OLED technology.

Once stopped, the market is no longer

Despite substantial investments in OLED panels, JDI is still convinced that its LCD panels can take an absolute advantage, coupled with market speculation, OLED panel demand has not yet reached a "full bloom" time. Therefore, JDI is not too urgent.

However, the reality is always cruel. In 2017, the iPhone X, which switched to the OLED screen, made JDI frustrated. Apple orders were robbed, JDI reorganized domestic and foreign production lines, and more than 3,700 employees were laid off. JDI's conservative offensive against OLED panels has already made it cool – relying heavily on Apple orders, Apple has not said goodbye to JDI's LCD.

It can be said that the heavy reliance on Apple is part of the reason why JDI has been ruined to this day. But as the saying goes, relying on people is worse than relying on oneself. In the end, JDI is still too "self-confident", self-sufficient in the dominant LCD technology; at the cost of self-righteousness, when the OLED panel market matures, you can always kill a bloody way. If you can understand this, you can only say that JDI is too naive.

In 2018, JDI once again began to consider delaying the mass production of OLED panels. The main reason is that OLED panel demand has not shown a rapid growth trend as expected, and LCD panels are beginning to show signs of revival.

Another important reason is that the price of OLED panels provided by Samsung is very high. According to reports, the cost of each panel of iPhone X has reached 110 US dollars, and it is reported to be between 120 and 130 US dollars. This is almost the manufacture of iPhone X. One-third of the total cost. If the cost exceeds expectations, it will naturally be passed on to consumers. The weak demand for iPhone X will also make JDI “lucky”.

And this year, Apple has begun to "return to the LCD." In addition to the Samsung display, which is the main supplier of Apple's OLED panel, the LCD panel of the iPhone 11 is provided by LGD, Sharp and JDI.

Japan Display Co., Ltd. hopes to exchange orders for a big turnaround. On March 30th, JDI will review the fund scheduling issue of more than 50 billion yen on the board of directors, including at least 30 billion yen (about 1.943 billion yuan). The capital increase will be used for the material procurement and production equipment costs required to increase the production of LCD panels.

However, the iPhone 11's LCD panel orders were not as expected, and the troubled JDI could not be saved. According to a report by the Nikkan Kogyo Shimbun on September 13, JDI's Baishan plant in Ishikawa Prefecture for the production of iPhone LCD screens will be suspended indefinitely.

The Baishan Plant, which was put into operation in December 2016, is JDI's most advanced factory, and most of the construction fund of about 170 billion yen is provided by Apple in the form of prepayment. However, due to the adoption of OLED panels by Apple, the operating rate of the Baishan plant is sluggish.

I don't know the future Japanese display company

Although JDI has not yet determined whether to fully produce OLED panels, in the current view of JDI, it is imperative to get enough funds for bail-outs. The investment plan has come, and it’s not a small blow to leave the JDI.

As early as December 2018, NHK TV Japan quoted people familiar with the matter as saying that JDI is negotiating with a consortium of Chinese companies and funds to accept an investment of about 50 billion yen, the largest shareholder of JDI Japan. The Industrial Innovation Investment Agency (INCJ) is also considering seeking financial assistance.

Until April of this year, JDI announced that it would receive a capital injection of 117 billion yen from Chinese investors and INCJ. But after that, Chinese investors have successively withdrawn their capital, and the industry has turned its attention to Apple. In October, JDI President Kikuoka was optimistic that he would receive up to 50 billion yen in investment from major clients, Apple Inc. and current companies. He also said that he hopes to complete the goal of raising 50 billion yen by the end of November.

If the financing goes well, JDI can be a little relieved. Next, we need to catch up and fill the gap in the OLED field for seven years. Because Apple plans to fully switch to OLED display in 2020, the time left for JDI is really little left!