“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.”
Read more in the full article here.
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.”
Governments need to let the markets play out. No company should be too big to fail, and tax dollars should not be used to artificially manipulate the markets.
Government bureaucrats should stick their noses out of the affairs of the private sector. If you can’t compete on your own merits then you shouldn’t be in business at all. If government mandated success were the norm you’d see the triumphant return of communism but I don’t think we’ll see that coming back any time soon.
Let it go, man. It’s been a week already.
I don’t disagree with you and BLN regarding what “should” be true. But we have to operate in the real world with what is currently true. For instance, if we had let the banks fail, then everyone would have been in trouble. My primary disappointment is that the greedy SOBs that got us into that mess got bailed out along with the companies.
We can and should work towards the ideal, but we also have to be pragmatic and take it step by step.
Sony was Steve Job’s inspiration, Apple is now Sony’s.
Excellence is the standard at Apple.
Too bad these will be some of the best LCD’s made, ‘cos unless they’re the cheapest, no matter how bad they suck, Americans won’t buy them.
I don’t care about Samsung, Sony or whosoever, but I do care about who Apple decides to partner with. It should be the best, the most innovative and the most supportive for Apple’s success, and also not to stab Apple in the back as the kimchee bastard, Samsung did. Apple’s success will be its success. Period.
A Sony, Hitachi, Toshiba merger? What will their new corporate name be?
S-Hi-T?
Just a one word Corruption .
These 3 companies are banks and the people ware paying for their failure.
Much like the US giving billions to banks … Well done …
This joint venture is actually expected to return profit in year since all the corporate bureaucracy will be cut once there will be one company instead of three.
So Japanese government might be wise in doing that.
I wonder what Sharp’s reaction is. The government that it pays taxes to has just engineered the creation of a competitor now larger than Sharp, and taken a 70% ownership stake. This is criminal.
I do not know what Sharp’s reaction is, but mine is that calling this company Japan Display while it does not include Sharp’s facilities is ridiculous.
You’ve got to wonder how Sharp feels about their own government stabbing them in the back.