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TOKYO: Japan Display will team up with China’s HKC Corporation to cooperate on next-generation technology for displays, it said on Monday (Apr 10), as the Apple supplier seeks to turn around its business after eight straight years of losses.
News of the tie-up, against the backdrop of Washington’s push to curb China’s ability to make advanced chips, sent Japan Display’s shares soaring. The stock closed up 21 per cent in its biggest one-day gain in a year.
Formed a decade ago when the LCD businesses of Hitachi, Toshiba and Sony merged in a government-brokered deal, Japan Display has been selling assets to try to return to profit.
Chief Executive Scott Callon told a briefing in Tokyo a capital tie-up could be possible in the future, and that the alliance was likely to build more than one new plant in China.
“This is not just a business alliance, but a significant strategic alliance,” Callon said, adding that it would bring together Japan Display’s technology and HKC’s cost competitiveness and large production capacity.
The two companies will jointly plan and build display-making plants, using Japan Display’s eLEAP OLED technology, targeting mass production in 2025, Japan Display said.
The company plans to provide its OLED technology to HKC, but will not invest in the new plants in order to earn licence revenues and procure advanced panels without making huge capital expenditure of its own, Callon said.
“I believe we need a fundamental change in our business model to earn big through small investments. Today’s announcement is part of that move,” he said.
HKC did not immediately respond to a request for comment.
Last month, Japan said it would curb exports of 23 types of semiconductor manufacturing equipment, without specifying whether the restrictions applied to China. It said manufacturers would need to seek export permission for all regions.
Asked about the curbs, Callon said Japan Display’s products were for commercial use and would probably not be affected.
“I don’t think there are any security issues,” he said.
The company, which is majority-owned by Cayman Islands-based Ichigo Trust, makes the small displays used in smartphones, cars and other products.
Callon is also the head of Ichigo Asset Management, an affiliated Japan-focused investment manager.
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