Sharp Shows Interest in Forming pan-Japan OLED Alliance with JDI

Sharp President Tai Jeng-wu told The Nikkei and other reporters that it intended to collaborate with Japan Display Inc. (JDI) in the development of OLED displays to catch up with Korean competitors Samsung.

Japanese manufacturers are lagging behind Korean competitors Samsung and LG in OLED technology.

In response to the Nikkei report, JDI coldly responded: “We’ve never heard about this plan. Foxconn and Sharp have not contacted us, so these partnership claims are untrue.”

Even an officer from Japan’s Ministry of Economy, Trade and Industry said the ministry was unaware of such plans.

For Sharp’s parent company Foxconn, OLED is a key to future growth because its biggest client Apple, and other major smartphone makers are adapting OLED displays in next generation phones. To deepen its business ties with Apple, it will be important for Foxconn to get hold of OLED technology, Sharp’s display technology was the main reason Foxconn invested in it. In the emerging OLED smartphone era, there are many uncertainties as to whether Sharp and JDI will remain Apple’s top display suppliers, but if the companies form a Japanese OLED alliance as suggested by Tai the outcome could be very different.

It will be very difficult for Sharp and JDI to form an alliance, though.

JDI is a joint venture formed by integrating Sony, Toshiba and Hitachi’s small to mid-sized display businesses. Initially, Sharp participated in the joint venture talks, but later decided to “carve out its own path”. Following JDI’s founding in 2012 it has a competitive relationship with Sharp. Moreover, Sharp has a rather delicate relationship with JDI’s largest shareholder Innovation Network Corporation of Japan (INCJ). Foxconn and INCJ were direct competitors in the bid for Sharp, in the end Sharp sealed the deal with Foxconn.

Even though JDI seemed disinterested in Sharp’s pan-Japan OLED Alliance concept, the market has responded warmly to the concept, which led to 13% surge in JDI share prices on Monday. Sharp’s stock value also rose 3%, and both companies share prices have continued an upward hike.

JDI previously planned to invest in OLED displays, but the large sum required for investments and its escalating fund procurement issues led it to seek financial aid from INCJ.

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