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February 18, 2014

$4 Billion IPO Planned by Japan Display

Japan Display Inc. is an LCD technology company that started as a joint venture between Sony, Toshiba and Hitachi. It is the world’s largest smartphone display manufacturer and a major partner of Apple, supplying it with the screens for the iPhone 5S and 5C.

According to the Wall Street Journal, Japan Display is preparing an initial public offering (IPO) to raise $4 billion in capital. The stated purpose behind the capital investment is to expand capacity and help nourish development of future technologies.

The company’s plan is to offer 158 million new shares for the IPO. That could bring in somewhere around $1.7 billion. The remaining amount would come from current shareholders releasing their stake in the company to bring the total IPO up to the $4 billion mark.

Japan has been seeing a lot of competition from the rise of both Chinese and South Korean companies. The WSJ states that the Japanese government currently holds 70 percent of Japan Display, with Sony, Toshiba and Hitachi each holding less than 10 percent. This is a major reason why Japan Display is looking to raise this $4 billion.

If the IPO is successful, it would be the largest offering in Asia this year, keeping in mind that the year has only just started. This is also the largest since the $8.5 billion offering for Japan Airlines Co. in 2012.

What has made the company profitable so far is its focus is on small to medium sized displays. During the first three quarters of the fiscal year ending in December 2013 the company was worth approximately $5 billion, with Apple making up 32 percent of all orders. According to estimates by research firm NPD DisplaySearch, Japan Display grabbed a top share of 17 percent in the global market for small and medium-size LCD panels by value of goods shipped last year.

Hiroshi Hayase, a Tokyo-based analyst for NPD DisplaySearch, feels that the technological lead for Japanese makers has increased after the release of the iPhone 5.

"The commoditization of smartphones is already starting,” Hayase said. “It's uncertain whether Japanese companies can make the kind of investment needed to maintain their edge in technology as prices go down."

The Japanese company has proven its skill in improving the energy efficiency of their screens.  This has allowed for Apple to boast of longer battery life. In addition, it is helping smartphone makers make their devices thinner. Japan Display integrates touch sensors into its liquid crystal display, thus eliminating the need for a separate touch-screen layer.

Thus, it appears that those involved with Japan Display’s upcoming IPO expect solid demand for the company’s shares. 




Edited by Blaise McNamee


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