Japan Display to Close Small LCD Fab
Japan Display (6740.JP) has decided to close a small (27,000 sheets/month) Gen 3.5 LCD fab in Higashiura, Japan by the end of the company’s 2023 fiscal year, which ends in March. The fab currently produces displays for cameras, wearables, automotive, and VR, with the production of those products to be transferred to JDI’s remaining fabs in Japan. The 259 employees at the fab will be offered employment at other sites at JDI and the company is evaluating whether the land and buildings can be sold or used for other purposes. The company will record expenses related to the closing in the 3/2023 fiscal year, although the amount is currently under review.
The Higashiura fab was commissioned in September 1999 and has therefore been in service for over 20 years, making it less efficient than current modern fabs. JDI has three fabs remaining in Japan, older Gen 4.5 lines in Mobara and Ishikawa, and newer Gen 6 lines in Hakusan and Mobara. We expect the impact of the closing will be a financial positive for JDI after closing costs, as production will move to newer fabs that will likely see higher utilization rates. JDI has been working toward reducing its breakeven for a number of years and while the company is getting closer to its goal, breakeven will not be achieved this fiscal year (3/22) as the decline in JDI’s traditional mobile display business has been severe this year while increases in the non-mobile display business have been relatively modest. We expect the closing of the Higashiura fab will help to lower the 3/2023 breakeven further, however JDI needs to continue to expand their non-mobile business further before they can return to profitability, which we expect could occur in the 2024 fiscal year.
The Higashiura fab was commissioned in September 1999 and has therefore been in service for over 20 years, making it less efficient than current modern fabs. JDI has three fabs remaining in Japan, older Gen 4.5 lines in Mobara and Ishikawa, and newer Gen 6 lines in Hakusan and Mobara. We expect the impact of the closing will be a financial positive for JDI after closing costs, as production will move to newer fabs that will likely see higher utilization rates. JDI has been working toward reducing its breakeven for a number of years and while the company is getting closer to its goal, breakeven will not be achieved this fiscal year (3/22) as the decline in JDI’s traditional mobile display business has been severe this year while increases in the non-mobile display business have been relatively modest. We expect the closing of the Higashiura fab will help to lower the 3/2023 breakeven further, however JDI needs to continue to expand their non-mobile business further before they can return to profitability, which we expect could occur in the 2024 fiscal year.
Japan Display Sales & Share By Category - Source: SCMR LLC, Company Data
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