Alliance with Japan against Korea?
Taiwan-based Hon Hai Precision Industry (Foxconn) which took over Japan's Sharp last year is reportedly also coveting Japan Display Inc. (JDI), Japan's largest display maker. Foxconn is planning to acquire JDI by forming Japanese alliance based on Sharp and compete with Korean companies such as Samsung Electronics in the OLED market.
According to the Nihon Keizai Shimbun newspaper on August 11, "If Sharp leads, I am confident about rebuilding JDI," said Dai Cheng-wu, president of Foxconn, number two of Foxconn in an interview with the Nihon Keizai Shimbun newspaper on August 10. "Foxconn is concerned about a leak of panel technology to China," Dai said, referring to a rumor that recently JDI was requesting support from China LCD display makers. "We need to create large Japanese alliance by attracting device and material companies."
The Japanese government founded JDI by integrating the display divisions of Sony, Hitachi and Toshiba in 2012 to nurture Japan’s flagship company in the display sector. The Innovation Network Corporation of Japan (INCJ), a public-private partnership holds a 36% stake in JDI as its largest shareholder. However, JDI is in financial difficulties because the company failed to turn its LCD-centric business structure into an organic light emitting diode (OLED)-oriented one. On August 10, the company said it will not rule out partnership with Chinese or Taiwanese companies for a business restructuring, announcing a strong restructuring plan that slashes 30% of its total workforce,.
Foxconn is also in an urgent position to cooperate with JDI to secure its position in the OLED market. According to the Mainichi Shimbun newspaper of Japan, Sharp is planning to produce OLEDs for smartphones next year, but the timing of mass production is yet to be set. Foxconn is planning to compete with Samsung Electronics and LG Display which monopolize the OLED market through the acquisition of JDI with OLED technology.
However, it is not clear that the Japanese government will recognize the cooperation between Sharp and JDI as Japanese alliance as Sharp was taken over by Taiwanese capital. "There is an opinion that INCJ will jib at investment in JDI by Asian companies such as those of Taiwan and China."