Japan Display Sells Module Factory to Chinese OEM
Japan Display (6740.JP), in keeping with its goal of reducing costs to bring the company back to profitability, has sold its display module facility in Suzhou to a Chinese OEM, converting fixed costs to variable. The module plant, which was incorporated in 1996, takes raw (‘open cell’) panels produced by JDI and adds backlighting, a frame, and a number of other components to create a display that can be used in a device. The subsidiary had annual sales between $394m and $487m over the last three years, but had net margins of 0.6% to 2.8% over the same period. The sale price, which is subject to a final audit, is ~$139m, which represents ~32.2% of the average of sales over the last three years. The sale is expected to be completed sometime between January and March of next year as it must be approved by a number of government organizations, and JDI will continue to use the module plant as a customer of the buyer, DSBJ (002384.CH), an OEM and assembler based in Suzhou.
While the last few years have been quite difficult for Japan Display as its primary customer, Apple (AAPL) has converted from LCD displays to OLED displays for its iPhone line, with JDI having little or no OLED capacity[1]. The company brought in Scott Callon, the Chairman of Ichigo (2337.JP), and the investment firm that bailed out JDI in 2020, as Chairman and CEO in to guide the company toward a new business model. Since then the new JDI management has closed one of four JDI LCD fabs in Japan and sold another module facility to Wistron (3231.TT) and while the company is still losing money on a quarterly basis the losses are considerably smaller than in the past and the company’s product portfolio is more oriented toward newer technology where JDI has an edge. All in, while it is both a difficult display environment and a hard road toward profitability, JDI seems to be making considerable progress toward regaining some of the statue the company had as a major supplier of small panel displays years ago.
[1] JDI shares a board member with JOLED
While the last few years have been quite difficult for Japan Display as its primary customer, Apple (AAPL) has converted from LCD displays to OLED displays for its iPhone line, with JDI having little or no OLED capacity[1]. The company brought in Scott Callon, the Chairman of Ichigo (2337.JP), and the investment firm that bailed out JDI in 2020, as Chairman and CEO in to guide the company toward a new business model. Since then the new JDI management has closed one of four JDI LCD fabs in Japan and sold another module facility to Wistron (3231.TT) and while the company is still losing money on a quarterly basis the losses are considerably smaller than in the past and the company’s product portfolio is more oriented toward newer technology where JDI has an edge. All in, while it is both a difficult display environment and a hard road toward profitability, JDI seems to be making considerable progress toward regaining some of the statue the company had as a major supplier of small panel displays years ago.
[1] JDI shares a board member with JOLED
Open Cell LCD Display - Source: Guangzhou Qiangfeng Electronics
LCD Module - Source: Gantch
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