BOE has a strong desire to acquire shares in JDI. Will China and Japan join hands to compete for Korean OLED?

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Japan's TV Tokyo (TV-TOKYO) reported on the evening of the 7th that Wang Dongsheng, chairman of China's leading LCD panel manufacturer BOE (BOE), said in an exclusive interview that he is willing to provide assistance to Japan Display Inc (JDI) which is undergoing operational reconstruction.

The funds required for mass production of OLED panels for smartphones are estimated to be as high as 200 billion yen, and JDI is exploring companies that are willing to provide assistance and make investments. Among them, BOE is considered one of the most likely donors. This time, the BOE head personally expressed his positive willingness to provide assistance to JDI.

The report pointed out that JDI plans to cooperate with several companies to finalize the operation reconstruction plan by the end of March 2018. BOE is a Chinese state-owned enterprise. With the strong support of the government, it has grown into the world's leading LCD panel factory and is investing 1.6 trillion yen to build a new OLED factory in Chengdu, China.

According to the quotation of Harvest XQ Global Winner System, JDI remained flat on the 7th, closing at 240 yen, ending a two-day decline. The decline so far this year has reached 27.93%.

Korean media BusinessKorea quoted Nikkei News on October 18th that Korean OLED technology is currently 5 to 10 years ahead of Chinese OLED technology. If Chinese and Japanese companies join forces, they may quickly catch up with Korean companies. Currently, Samsung Display, a subsidiary of Samsung Electronics, has a market share of 95% for small and medium-sized OLED panels, while LG Display is the only manufacturer of large OLED panels.

On October 4, Nikkei, Reuters, Sankei and other Japanese media reported that JOLED, a Japanese OLED panel developer and JDI Group company, plans to start mass production of OLED panels using "printing (liquid luminous materials are applied to the substrate as precisely as a printer)" technology at JDI's Nomi plant in 2019. In order to raise funds for mass production, JOLED plans to increase its capital by 100 billion yen and has explored the possibility of investment from dozens of Japanese companies including Sony, Canon, Fujifilm Holdings, Nikon, and Sumitomo Chemical.

The report pointed out that South Korea's Samsung and LG are currently leading the OLED panel market. However, compared with the "evaporation type (vaporizing red, green, blue and other luminous materials and attaching them to the substrate under vacuum)" technology used by Samsung and others, JOLED's printing technology has a smaller initial investment burden and less material consumption. The manufacturing cost is expected to be 30-40% lower than the evaporation type. Once the cost is reduced, it is expected to provide OLED panels at a lower price. Therefore, JOLED plans to use price competitiveness as a weapon to make up for its disadvantage.

Nikkei reported on September 12 that Sharp's senior executive Daiki Okutani said in an interview that in order to compete with Korean companies, he has proposed to JDI and hopes to cooperate in the OLED business. Daiki Okutani pointed out that "Japanese companies, including equipment and material manufacturers, should cooperate to keep the foundation of OLED and other panel technologies in Japan. And it does not necessarily have to be led by Sharp." Regarding the possibility that Chinese manufacturers will provide assistance to JDI, Daiki Okutani said, "If JDI's technology flows to China, Japan's domestic industrial foundation may decline. This will have a great impact on Sharp."

Kyodo News reported on August 8 that JDI, which is in operational trouble, is considering introducing external funds, and Taiwan's Foxconn (2317) and China's Tianma Microelectronics (000050) are its potential targets. JDI has inquired about the intention of investment from Foxconn and Tianma Microelectronics through financial institutions acting as financial advisors.

Mainichi Shimbun reported on August 8 that according to relevant sources, Foxconn and Tianma Microelectronics are interested in acquiring the 35% stake in JDI held by the Japanese public-private fund Industrial Innovation Organization (INCJ). JDI is expected to decide on a capital partner this fall and complete the relevant procedures within 2017 (before the end of March 2018).

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