“Japan’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,” Mayumi Negishi reports for Reuters. “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.”
Negishi reports, “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,” Negishi reports. “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.”
“The three firms together controlled 21.5 percent of the market for small and medium-sized displays last year, larger than Sharp with 14.8 percent or Samsung Mobile with 11.9 percent, research firm DisplaySearch estimates. While all three had been loss making in small panels until last year, they were expected to pull into the black in the current financial year,” Negishi reports. “They had hesitated about investing in a new line to compete against Sharp, which is due to receive a $1 billion investment from Apple Inc, or South Korean rivals LG Display and Samsung Mobile Display, which have supply agreements with key clients.”
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