Image via CrunchBaseJapan's Sony Corp, Toshiba Corp and Hitachi Ltd will merge their liquid-crystal
display operations using $2.6 billion of government-backed funds to fend off
growing competition from rivals in South Korea and
Taiwan.
The merged entity will be the world's largest maker of small panels used in
smartphones and tablet PCs, leapfrogging leaders Sharp Corp of Japan and Samsung Electronics of
South Korea and keeping at bay the likes of Taiwan's AU Optronics.
Sony, Toshiba and Hitachi were all making losses on small panels until last
year so the merger will allow them to focus on their main operations.
However, the 90-percent government-owned fund, set up in 2009 to promote
innovation in Japanese industry, could come under fire for using public money to
prop up a volatile business in its biggest investment to date.
The Innovation Network Corp of Japan (INCJ) will invest about 200 billion yen
($2.6 billion) in the merged unit, taking a 70 percent stake. The three firms
said on Wednesday that they will each take a 10 percent stake.
They aim to complete the merger by the spring of 2012 and list the merged
entity, to be called Japan Display, by the financial year ending March 2016. By
then, they intend to have boosted annual revenues to 750 billion yen from 570
billion yen expected in the year to March 2012.
A shakeup has been long expected because harsh competition and advances in
technology require producers to make regular large-scale investment.
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