Japan Display Inc. is considering slashing around 4,000 jobs, about 30 percent of its total workforce, by streamlining manufacturing lines, mostly overseas, to turn around its struggling business, sources close to the matter said Tuesday.
The liquid-crystal display maker, formed in 2012 through a merger of the LCD operations of Hitachi Ltd., Sony Corp. and Toshiba Corp., incurred losses for the three fiscal years through last March.
A harsh business environment will likely continue for the company as its key client Apple Inc. is turning away from LCDs and toward organic light-emitting diode displays. Japan Display lags behind rivals in OLED development.
The struggling company is planning to cut around 3,500 jobs overseas by eliminating and integrating factories in countries including China and the Philippines.
It will also solicit voluntary retirement from 250 workers in Japan by streamlining operations mainly at three plants in Ishikawa Prefecture.
The Japan Display group’s workforce totaled around 13,000 at the end of March. With job cuts, it aims to slash ¥50 billion in its annual fixed costs and return to profitability.
As for domestic production, the maker plans to suspend output of LCD panels for smartphones at its plant in Nomi, Ishikawa Prefecture, by the end of this year and shift workers to the nearby Hakusan plant equipped with cutting-edge production facilities.
At its plant in Kawakita, production will shift to LCD panels for vehicles to better cope with an expected rise in demand for the products.
The Nomi plant may resume operation eventually when production of next-generation OLED panels gets into gear, the sources said.
With losses associated with the streamlining of the manufacturing bases estimated to reach ¥150 billion, it is seen as inevitable that Japan Display will remain in the red for the fourth straight year in fiscal 2017.
The manufacturer is also hoping to receive a capital infusion to shore up its shaky financial base. An investment fund and a Chinese LCD panel maker have shown interest in becoming a partner, according to sources.
Japan Display’s three main lenders — Mizuho Bank, Sumitomo Mitsui Banking Corp. and Sumitomo Mitsui Trust Bank — are set to extend the company new lines of credit worth ¥110 billion, with its top shareholder, the government-backed fund Innovation Network Corp. of Japan, guaranteeing the loans.
The maker also plans to introduce an in-house company system in October, dividing display operations for vehicles, mobile gadgets or for other installations in a bid to speed up its decision-making process and better control its costs and earnings.
The company is expected to announce those restructuring measures Wednesday.