August 31, 2011,
Sony, Hitachi and Toshiba to Merge LCD Units
announced on Wednesday that they would work with a government-backed
fund to spin off and merge their liquid-crystal display businesses, joining forces in the face of rising global
The deal could create the world’s biggest maker of LCDs for mobile phones and cameras, with 22 percent of the
market for small and midsize screens, according to DisplaySearch, an industry research firm.
The fund, the Innovation Network Corporation, will invest 200 billion yen ($2.6 billion) in the new company for a
70 percent stake, while the three manufacturers will equally split the other 30 percent, they said in a statement.
The Japanese government has long encouraged the nation’s manufacturers to consolidate as a way to increase their
presence in global markets and better fight mounting competition from rivals like Samsung Electronics of South
Korea, which is now far bigger and profitable than any single Japanese electronics maker.
But the use of public money to invest in private companies, especially in volatile industries, could draw fire at a time
when the government is struggling to pare down its expanding public debt. Sony, Hitachi and Toshiba have lost
money in their LCD businesses, though Toshiba’s returned to profitability last year.
The overall market for small and midsize LCD screens is booming. Sales are likely to jump 22 percent this year, to
$24 billion, according to DisplaySearch.
“By integrating each partner company’s wealth of display expertise and know-how, I am confident the new company
will become a driving force for technological innovation and new growth in the rapidly expanding” market,
, Sony’s chief executive, said in a statement.
The newly formed business, named Japan Display, will hire managers from outside the three companies and invest
in new production lines, the statement said. The companies, which expect to complete the merger by the spring, plan
to increase sales by then to 750 billion yen ($9.8 billion), from the expected 570 billion yen ($7.4 billion) for the
three units collectively.
The venture must gain approval from antitrust regulators in Japan, but authorities here have been supportive of the
government push to consolidate Japanese industry.
Since 2009, the Innovation Network Corporation, 90 percent of which is owned by the government, has helped
Japanese companies make acquisitions abroad and invested in promising new businesses in the manufacturing and
new energy industries.
This year, the fund took a 33.3 percent stake in Japan’s first low-cost international airline, a joint venture between
All Nippon Airways and a fund based in Hong Kong.