Japanese electronics giants Sony Corp, Toshiba Corp and Hitachi Ltd yesterday said they planned to merge their small and medium-sized LCD businesses for smartphones and tablet computers.
The move aims to create a new company, Japan Display, by spring next year.
Analysts said the entity would dominate the market, surpassing leader Sharp Corp, as well as growing rivals such as South Korea’s Samsung Electronics and Taiwan’s Chimei Innolux (奇美電子).
Japanese firms are looking to better compete against rivals in high-resolution display technology as demand intensifies for smartphones, tablet computers and other gadgets, and as a strong yen erodes their competitive edge.
The company will be partly financed by the Innovation Network Corp of Japan, a private-public investment fund established in 2009 to support next-generation businesses.
The government-affiliated body is set to invest about ¥200 billion (US$2.6 billion) in the project and take a 70 percent stake, with Sony, Toshiba and Hitachi each holding 10 percent.
The companies said they planned to sign legally binding agreements later this year and complete the integration by spring next year as they seek to position themselves better in an intensely competitive market.
“By integrating each partner company’s wealth of display expertise and know-how, I am confident the new company will become a driving force for technological innovation and new growth in the rapidly expanding small and medium-sized display market,” Sony CEO and president Howard Stringer said.
Chimei yesterday told the Taipei Times it was surprised at the size of the Japanese government’s stake in the venture. However, the company declined to make any further comment on the news, with a company official, who preferred not to be named saying that the three Japanese firms had already announced in June their intention to form such a venture.
Analysts said further consolidation was needed, with too many Japanese companies making the same products compared with the likes of South Korea and its industrial champions, such as Samsung.
By merging operations, Sony, Hitachi and Toshiba will create a firm that can hold more than a 20 percent share of the market, compared with current industry leader Sharp, which has about a 15 percent share.
The current strength of the yen against other major currencies also erodes Japanese firms’ repatriated earnings and makes it harder for domestically made goods to be competitive when sold overseas.
Such moves are inevitable as “it is difficult for Japanese companies to compete individually at the current yen rate,” Tokyo Tokai Research analyst Haruo Sato said.
Additional reporting by Lisa Wang
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