JDI’s Massive Layoff Might Cause Huge Net Loss in the Short Run

The Japanese digital panel giant Japan Display Inc. (JDI) had a struggle revamping its liquid crystal display (LCD) panel business. To make the recovery happen, JDI planned to accept fundings from outside investors. Not only that, JDI will restructure LCD panel production sites, and lay off employees at a large scale, slashing about 4,000 jobs, according to Nikkei's report on August 8.

In terms of the amount of JDI's total employees (until the end of March 2017), there were about 13 thousand people. The layoff ratio will hit as high as 30 percent.

(Image: Japan Display Inc.)

The massive layoff will be implemented in factories outside Japan (in China or Philippines), according to the news. In these locations, over 3,500 jobs are estimated to be cut. As for employees in Japan, JDI will encourage voluntary early retirement, so as to remove about 250 employees.

In addition, JDI's plant in Nomi, of which the capacity is for the production of smartphone LCD screens, is planned to stop the manufacturing by the end of 2017. Employees working at the plant will be transferred to a factory nearby. The Nomi Plant might re-operate as a site to produce OLED panels later on.

The fixed assets impairment and layoffs are estimated to create a loss of over 150 billion Japanese Yen. JDI's consolidated net loss in this fiscal year (between April 2017 and March 2018) might surpass 200 billion Japanese Yen. (JDI's net loss of last year was 31.6 billion Japanese Yen). In other words, JDI’s finance might continue to be in red for four years in a row.

In addition, JDI began to seek potential of collaboration on investment or business partnerships with enterprises inside or outside Japan. JDI will finalize the decision of which companies to work with in 2018.

China-based panel maker Tianma already proposed an investment project to JDI. BOE and CSOT were rumored to contact JDI as well. Chinese firms (such as Tianma) were heard that they might purchase 35% of INCJ's stake in JDI, based on Nikkan Kogyo Shimbun's report on August 8.

JDI was a joint venture, formed under the leadership of the Japanese government and with the effort from Sony, Hitachi and Toshiba's LCD panel division in 2012. INCJ is currently the biggest stakeholder of JDI.

Sharp expressed a keen interest toward JDI who is implementing an operational reorganization, signaling for technological collaboration. Sharp's executives told the Japanese press on August 7, "due to the Sherman Antitrust Act, Sharp cannot purchase or merge with JDI. However, technological collaboration is acceptable. Sharp hopes to gather Japanese technical talents and create an alliance of Japanese technologies," according to Nikkei on June 7.

Sharp's executives further pointed out, "Sharp is not able to contact JDI directly. Therefore, the Japanese government or the Ministry of Economy, Trade and Industry (METI) should guide both Sharp and JDI to form the technical collaboration." INCJ, under the supervision of METI, is a major stakeholder of JDI. 

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