Breakthrough from Samsung display rival sets Tokyo market alight
Shares in technology company Japan Display jumped after it emerged as a serious long-term challenger to Samsung as a supplier of screens for Apple’s iPhones.
The Japanese group jumped as much as 29 per cent in Tokyo on Wednesday morning, before closing 24 per cent higher on the day.
The share price move, which analysts now see as premature, reflects how sensitive the market is to any developments in an area where Apple is caught uncomfortably relying on its major competitor as its chief supplier.
One of Japan Display’s key partners, Maxwell Holdings, said late on Tuesday that researchers had successfully developed a new low-cost way to make organic light-emitting diode (OLED) screens — which Apple has started using in its smartphones — with a higher resolution than what is currently available, and it was moving to mass production next year.
The company, which has mostly struggled since listing in 2014, is positioned to “eventually compete” with Samsung and LG Display, said Goldman Sachs analyst Daiki Takayama.
A number of local corporations, including Sony, Canon, Fujifilm and Nikon, were listed by Nikkei on Wednesday as having been approached as part of a ¥100bn ($888m) capital raising to advance the project into the manufacturing phase, though Japan Display did not confirm this report.
The technology developments and moves towards investment in manufacturing reflected good progress but the market “overacted”, according to another Tokyo-based analyst who spoke to the Financial Times.
He said Japan Display’s new screen could potentially be used in future Apple smartphone models but before orders come in the tech giant would need to decide to move to a “completely different technology” from what Samsung currently provides.
The Japanese group also makes a display that is similar to Samsung’s product and some investors appeared to confuse the new technology as an immediate alternative to Samsung’s screens.
“People didn’t understand the difference, so investors jumped in,” the analyst said.
While the breakthrough could ultimately position Japan Display to contend with Samsung on the Apple supply chain, it was too soon to consider the financial impact on the Korean tech giant, Mr Takayama said.
With the uncertainty surrounding the Japanese company’s ability to win orders from smartphone manufacturers, Goldman Sachs sees Samsung as securing most of the OLED market through 2020.
Japan Display’s business plan suggested it would start only “small-volume” sales of the new screens in the third quarter of 2019, analysts from Deutsche Bank said in a research note.
“It is too early for optimism in our view,” the Deutsche analysts added.
The Japanese government in December invested $640m to help the company develop its OLED screens.
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