Not According to Plan
Japan Display (6740.JP) was a poorly managed company. In its heyday, it was the primary small panel supplier to Apple for the iPhone, but the company refused to acknowledge Apple’s slow, but steady transition from JDI’s LCD displays to OLED displays and a singular focus on LCD technology eventually cost them this very lucrative customer. Without Apple JDI faced the intense competition that exists in the small panel LCD space, which became even more competitive as relatively new Chinese LCD panel producers cut prices to gain market share. This caused Japan’s quasi-government funding organization, the Innovation Network of Japan, JDI’s largest shareholder, to began to look for an exit strategy. Luckily, a Japanese Asset management firm, Ichigo (2337.JP) decided that JDI was worth saving and in 2020 offered 100.8b¥ (~$926m US) for a 44.3% controlling interest. Since then Ichigo’s stake has increased to almost 80%.
JDI’s new management took the stance that a restructuring was in order to reduce JDI’s outstanding debt and losses and lessen the reliance on small panel LCD production. Ichigo increased focus on JDI’s more profitable automotive display business and began to slowly wind down the LCD panel business. Ichigo also discovered that JDI had been developing a process for maskless OLED production using photolithography instead of the more complex vapor deposition commonly used and began to promote this process as e-LEAP, along with the company’s sensor technology.
In August 2023, as part of Ichigo’s cost reduction and business focus plan, they decided to close one of JDI’s three production plants in Tottori, Japan with a target date of 3/2025, with much of the automotive display production in Tottori being shifted to JDI’s Ishikawa, Japan fab. Over time, management realized that the costs associated with the company’s Mobara, Japan fab were far higher than costs at the Ishikawa fab, and earlier this year the decision was made to close the Mobara fab by March of 2026. This leaves JDI with one production fab that will, produce automotive displays, sensors, and any other products developed by the company.
Unfortunately, JDI’s fiscal 2025 year (ended 3/31/25) was not a kind one, and despite the cost cutting and rationalization of assets, sales declined by 24% y/y. Some of this was expected as the company continued to wind down its generic LCD small panel production (considered a non-core asset), but core sales were down 15% y/y on slower customer demand for existing products, forcing an operating profit decline of 6.9% y/y and net profit declined of 76.5% y/y as the costs of shutting down both fabs were taken in the 2025 fiscal.
Based on the full year results, the CEO of JDI, Scott Callan, also the Chairman of Ichigo Asset Management, will step down, although remaining as board chair, with a new CEO starting on June 1. The board has also approved a $37.7m US short-term loan to JDI from Ichigo due July 31 of this year. JDI is also transferring ownership of the Mobara fab to Ichigo, along with some JDI IP that will satisfy 65b¥ ($446.4 US) owed to Ichigo. The Mobara fab already meets AI datacenter requirements so it will either be developed into a data center by Ichigo or sold to someone who will do the same. Further, JDI has announced a reduction in executive compensation and bonuses and is instituting a workforce reduction of 1,500 employees, ~57% of the current workforce.
All in, JDI’s inability to meet their own goals has pushed the company to take more drastic steps. Which they expect will lead to a smaller but profitable company two years in the future. That said, with so many changes (we have left out any discussion of the company’s plans for e-LEAP, as the company has recently aligned with OLEDWorks (pvt) as a foundry partner, rather than build an e-LEAP fab itself. Those plans are still in an early stage.) the company did not give guidance for this year’s results, and with a new CEO that task will fall to him, but here’s what the company predicts over the two-year period:
JDI’s new management took the stance that a restructuring was in order to reduce JDI’s outstanding debt and losses and lessen the reliance on small panel LCD production. Ichigo increased focus on JDI’s more profitable automotive display business and began to slowly wind down the LCD panel business. Ichigo also discovered that JDI had been developing a process for maskless OLED production using photolithography instead of the more complex vapor deposition commonly used and began to promote this process as e-LEAP, along with the company’s sensor technology.
In August 2023, as part of Ichigo’s cost reduction and business focus plan, they decided to close one of JDI’s three production plants in Tottori, Japan with a target date of 3/2025, with much of the automotive display production in Tottori being shifted to JDI’s Ishikawa, Japan fab. Over time, management realized that the costs associated with the company’s Mobara, Japan fab were far higher than costs at the Ishikawa fab, and earlier this year the decision was made to close the Mobara fab by March of 2026. This leaves JDI with one production fab that will, produce automotive displays, sensors, and any other products developed by the company.
Unfortunately, JDI’s fiscal 2025 year (ended 3/31/25) was not a kind one, and despite the cost cutting and rationalization of assets, sales declined by 24% y/y. Some of this was expected as the company continued to wind down its generic LCD small panel production (considered a non-core asset), but core sales were down 15% y/y on slower customer demand for existing products, forcing an operating profit decline of 6.9% y/y and net profit declined of 76.5% y/y as the costs of shutting down both fabs were taken in the 2025 fiscal.
Based on the full year results, the CEO of JDI, Scott Callan, also the Chairman of Ichigo Asset Management, will step down, although remaining as board chair, with a new CEO starting on June 1. The board has also approved a $37.7m US short-term loan to JDI from Ichigo due July 31 of this year. JDI is also transferring ownership of the Mobara fab to Ichigo, along with some JDI IP that will satisfy 65b¥ ($446.4 US) owed to Ichigo. The Mobara fab already meets AI datacenter requirements so it will either be developed into a data center by Ichigo or sold to someone who will do the same. Further, JDI has announced a reduction in executive compensation and bonuses and is instituting a workforce reduction of 1,500 employees, ~57% of the current workforce.
All in, JDI’s inability to meet their own goals has pushed the company to take more drastic steps. Which they expect will lead to a smaller but profitable company two years in the future. That said, with so many changes (we have left out any discussion of the company’s plans for e-LEAP, as the company has recently aligned with OLEDWorks (pvt) as a foundry partner, rather than build an e-LEAP fab itself. Those plans are still in an early stage.) the company did not give guidance for this year’s results, and with a new CEO that task will fall to him, but here’s what the company predicts over the two-year period:
Its not that we doubt the company’s ability to meet its goals, and we expect there has been some extensive modeling done to justify and confirm the model above to potential investors, but as was the case in the 2024/2025 year, sales of the company’s core products did not meet expectations. As the company is product rich, if there was anything we would not cut spending on, it would be marketing, as JDI needs to make sure their remaining fab is always full and that customers are the only thing that will get the company even close to its goals. Its been a long road for Japan Display, it would be a shame to see it disappear.
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