JDI valuation is about 7.2 billion yuan for sale, the final glory of the Japanese panel industry

JDI valuation is about 7.2 billion yuan for sale

On April 12, 2019, Taiwan's touch panel manufacturer TPK-KY Yuhong announced that it plans to invest US$230 million and join hands with China's Harvest Fund and Fubon Caijia to acquire nearly half of JDI's equity and become JDI. The largest shareholder.

The main announcements of TPK are as follows:

The company signed a letter of intent with Suwa Investment Holdings LLC (hereinafter referred to as "Suwa").

According to the letter of intent, the company intends to participate in the private placement of Japan Display Inc. (hereinafter referred to as “JDI”) through Suwa (hereinafter referred to as “the capital increase case”), and the company and JDI also signed an LCD business cooperation agreement.

According to the current plan, Suwa's estimated investment amount for JDI is 60 billion yuan, of which the common stock of JDI is subscribed at US$42 billion, and the subscription price per share is 50 yuan. It is expected to obtain 49.82% equity of JDI. JD 18 billion to subscribe for JDI's convertible corporate bonds.

In addition, Suwa may separately subscribe for JDI convertible corporate bonds of JPY 20 billion in accordance with JDI's operational needs. The company's capital contribution to Suwa is estimated to be US$230 million, accounting for 41.8% of SUWA's equity.

In addition to the Company, it is expected that Harvest Tech Investment Management Co., Ltd. (hereinafter referred to as "Cass") and the private investment company of Fubon Chua Family, Cosgrove Global Limited/Topnotch Corporate Limited (below) Called "CGL Group") to participate in the investment case (hereinafter collectively referred to as "investment team"). Harvest and CGL Group accounted for 34.5% and 23.6% of SUWA's respective shares, respectively.

If Suwa is expected to obtain a 49.82% stake in JDI's investment of 60 billion yen, JDI's valuation is about 120.4 billion yen, or about 72 yuan. At present, JDI has two 6-generation LTPS LCD production lines with Apple, which can supply mobile phone panels for Apple. The level of technology and quality are better.

In addition, JDI also received Toshiba and Sony's original panel production line, mainly used to produce industrial control and automotive panel products. Prior to this, JDI was also the world's second largest automotive panel manufacturer. At the same time, JDI also has an OLED test line. It is reported that the product of this line may supply Apple Watch Panel this fall.

Overview of the development of TFT panel industry in Japan

When the global flat panel display industry evolved from a black and white LCD display to a color STN LCD, the European and American industries not only completely withdrew from the CRT display manufacturing, but also turned to the chip and LED semiconductor industry, and also promoted the entire industry to patent the TFT LCD liquid crystal display. The technology is fully licensed to prevent the panel industry from forming unnecessary industry monopolies. (It turns out that even then, the European and American countries have adopted the "price alliance" approach by the Japanese, Korean and Taiwanese panels, which has affected the global monopoly of disguised industries.)

In the development of the TFT-LCD large panel industry, Japan was the first country to invest heavily. In 1992, TFT-LCD panels began mass production in Japan. NEC, Matsushita Electric, Sanyo Electric, and Sharp have successively invested in the first-generation TFT-LCD production line. By 1994, there were about nine first-generation TFT-LCD production lines in Japan with a monthly capacity of approximately 253,000 (glass substrates); In the year, Japan's LCD panel shipments accounted for 90% of the global market share and became a well-deserved industry leader.

However, after the Asian financial crisis in 1997, Japanese companies were unwilling or unable to continue investing in liquid crystal panel production lines that required huge funds to be backed up due to the inability to reduce production costs and shrinking investment capital. The way to move production technology overseas is to cooperate with Taiwan, which is less affected by the financial crisis.

Since then, Japan has chosen to transfer products with high production costs and low profits to Taiwan, and at the same time, signed repurchase contracts with Taiwanese manufacturers, so that Japan can maintain the supply of panels required for the downstream application market without problems. The amount of technology transfer fees for more forward-looking display technology development research.

Subsequently, Japanese companies began to gradually withdraw from the LCD panel manufacturing industry as the original production line ages or reaches the retirement period. In 2004, Sanyo and Seiko Epson entered the LCD panel industry joint venture. In 2006, Sanyo Electric transferred its shares to Epson and withdrew from the industry, while Epson withdrew from LCD panel manufacturing in 2012.

Japan's NEC closed its Kagoshima LCD panel factory in 2009. In 2011, it sold 70% of its shares in small and medium-sized LCD panels to Shenzhen Tianma Group in China, and exited LCD panel manufacturing.

On December 27, 2011, Sony and Samsung reached an agreement, Samsung paid about 1,800 billion won ($935 million) in cash to acquire a 50% stake in all S-LCD companies owned by Sony (Sony and Samsung joint venture LCD panel companies). Through the acquisition, Samsung will wholly own S-LCD, and Sony has also withdrawn from LCD panel manufacturing.

Mitsubishi Electric also withdrew from LCD panel manufacturing in 2014. In 2017, Japan’s last generation 8.5-generation TV panel line was also suspended, officially bidding farewell to the panel manufacturing industry.

Sharp, due to the huge investment in plasma technology in 2008, made a mistake in the direction, coupled with the drag of the solar business, gradually declined, and was acquired by Hon Hai Group in 2016. Hon Hai has decided to set up the factory in Guangzhou, China, to transfer technology and manufacturing to China.

The remaining Japanese panel companies, under the leadership of Japan's INCJ (Industrial Innovation Agency) in April 2012, integrated Toshiba, Sony, and Hitachi's LCD panel manufacturing equipment business into Japan Display Corporation (JDI). At the same time, Toshiba withdrew from the LCD display business in 2012, and Hitachi exited the LCD display business in 2016.

Japan INCJ is an investment fund with an official background in Japan, similar to China's government industry fund. In addition to leading JDI, it also dominated the investment of JOLED, and also integrated the related OLED resources of Toshiba, Sony and Hitachi. As a result, JDI and JOLED are now the last companies in Japan to produce display panels on a large scale.

TPK's wishful abacus

TPK Yuhong was originally a LCD module rear-end module processing enterprise. Before Apple introduced the mobile phone, it did not think about investing in the front-end touch screen.

When Apple wants to launch a mobile phone, several manufacturers of capacitive touch screens in the industry may not meet Apple's requirements, or they are not optimistic about Apple's mobile phone, and are not willing to develop new products or expand production capacity.

At the time, TPK Yuhong, who was seeking transformation, bought the ITRI patent under the impetus of the Taiwan Industrial Technology Research Institute and started to develop a new type of model with Apple. The mutual-capacitive touch screen has become a large-scale touch panel enterprise specialized in producing capacitive touch screens.

Because of this, in the follow-up cooperation process, Apple has always listed TPK Haohong as an important partner. In the first generation of capacitive touch screen, even professional display panel companies Shenghua with better quality and lower. The price cuts in, and Apple still maintains a larger TPK order share.

After Apple's mobile phone turned to in-cell touch display, TPK Yuhong still got its full-fit rear-end module processing orders to be maintained, and did not take the road to victory. Until now, although most of Apple's orders have to be traded, TPK is still the prime supplier of Apple's touch panels.

However, TPK Yuhong relies solely on Apple's back-end touch display module to process orders, and it has become increasingly difficult to achieve better operating results. TPK Yuhong had previously tried to transform the order for the Android camp, but the result was the same as that of Other Apple camp suppliers. The more orders for the Android camp, the more serious the losses, TPK Yuhong had to end the Android camp business early. Continue to concentrate on making Apple's orders to survive.

As a result, TPK has always been interested in integrating display touch resources in the Apple supply chain. Prior to this, TPK Yuhong also reconciled with the business rival Ou Feiguang, and fitted a company to undertake the front-end production orders of Apple's tablet PC. Later, for various reasons, the joint venture cooperation case was not successful.

After JDI's operation was not supported by Japan's INCJ, Apple only turned some mobile phone orders to OLED, and LCD orders still have LGD in production. TPK still expressed its intention to take over JDI. This time, JDI no longer insists on the dominance of management, and officially seeks real sales. In the absence of a better person to pick up, TPK actively participates in related issues, and to some extent, it can be said to satisfy Apple’s will. .

With JDI also wanting to take advantage of the opportunity to sell, looking for more funds to develop OLED panel manufacturing, TPK Yuhong is more practical, in addition to being able to continue to get a bigger share from Apple's LCD mobile phone panel orders, JDI Global The market-first car panel business is another key focus of TPK's focus.

TPK Yuhong stated in the announcement of the purpose of the acquisition: the purpose of this case is to strengthen the upstream and downstream cooperation and vertical integration of the touch and display industry supply chain to enhance the synergy of production and new technology development; and expand the touch screen in the car. Use the penetration rate of the electronic market and expand the customer base.

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