Apple supplier Japan Display made one crucial mistake

Tim Culpan for Bloomberg Opinion:

Japan Display Inc.’s decision to cut staff, reduce pay and take more write-offs was the inevitable result of management’s short-sighted strategy.

A planned bailout by a consortium of new backers is unlikely to solve its core problems unless key changes are made.

I argued in February that the company needs new leadership. On Wednesday it announced just that: President and CEO Yoshiyuki Tsukizaki will step down on Sept. 30. JDI will also cut around 26% of its workforce and close a factory.

It didn’t have to be like this…

It found success early, landing Apple Inc. as a client and supplying iPhones year after year. R&D spending data indicate that this may have lulled management into a false sense of security.

Over the past six years, JDI cut R&D while others were raising it. That was a crucial mistake.

MacDailyNews Take: Yes, it certainly was.

We’ve had one of these before, when the dot-com bubble burst. What I told our company was that we were just going to invest our way through the downturn, that we weren’t going to lay off people, that we’d taken a tremendous amount of effort to get them into Apple in the first place — the last thing we were going to do is lay them off. And we were going to keep funding. In fact we were going to up our R&D budget so that we would be ahead of our competitors when the downturn was over. And that’s exactly what we did. And it worked. And that’s exactly what we’ll do this time. — Steve Jobs

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