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.
Innovation Network Corporation of Japan (INCJ), Hitachi,Ltd., Sony
Corporation and Toshiba Corporation announced today that they have
signed a non-binding Memorandum of Understanding to integrate their
small- and medium-sized display businesses, which are operated by
subsidiaries of Hitachi, Sony and Toshiba, in a new company to be
established and operated by INCJ (NewCo). INCJ, Hitachi, Sony and
Toshiba are aiming to sign definitive and legally-binding agreements
in the Autumn of 2011 and to complete the business integration in
the Spring of 2012, subject to the receipt of any necessary
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. Sony, Toshiba and Hitachi will each take a 10 percent stake,
the three firms said on Wednesday.
All of the issued shares of subsidiaries of Hitachi, Sony and
Toshiba engaged in the small- and medium-sized display business
(i.e., Hitachi Displays, Ltd., Sony Mobile Display Corporation and
Toshiba Mobile Display Co., Ltd., ) and other assets are planned to
be transferred to NewCo.
The merger will create the world's largest maker of small panels
used in smartphones and tablet PCs, leapfrogging global leaders
Sharp and Samsung Electronics.
The global market of small- and medium-sized displays is expected to
grow rapidly due to anticipated strong demand for high resolution,
high value-added products, particularly for smartphones and tablet
computers, and superior high resolution display technology, in which
Japanese companies are world leaders, is key to competitiveness.
NewCo is expected to utilize the world?s best high value-added
technologies and establish new production lines by utilizing
capital, which will be provided by INCJ, in order to meet the market
demand for high value-added products.
In order to maintain and enhance the world's best technologies,
NewCo is also expected to invest in the world's most advanced
research and development. This investment will focus on the
development of high-potential next-generation technologies,
including higher resolution and thinner Organic light-emitting diode
(OLED) displays, in an effort to drive forward the market as a
Each of INCJ, Hitachi, Sony and Toshiba plans to appoint the outside
directors of NewCo. Also, INCJ, Hitachi, Sony and Toshiba intend to
provide NewCo with technical support, and NewCo will establish a
strong governance framework and business infrastructure.
"This is a landmark project for INCJ in our mission to make
impactful, long-term and hands-on investments to grow
next-generation businesses worldwide in the spirit of open
innovation," said Kimikazu Noumi, CEO of INCJ. "The new company will
become a leading small- and medium-sized display manufacturer, and
by pooling compelling technological know-how, will be positioned to
win in a competitive and lucrative global growth market that has a
real impact on the quality of people?s everyday lives."
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
All three companies had hesitated about investing in a new line to
compete against Sharp, which is due to receive a $1 billion
investment from Apple, or South Korean rivals LG Display and Samsung
Mobile Display, which have supply agreements with key clients.