After rough IPO, concern for Apple supplier Japan Display

The IPO for the world's largest smartphone display supplier did not go swimmingly on Wednesday.

The iPhone 5S uses a screen from Japan Display Inc.
The iPhone 5S uses a screen from Japan Display Inc. Apple

Japan Display, the world's largest smartphone display supplier, had a rough IPO on Wednesday.

When Japan Display (JDI) listed its shares in a $3.1 billion initial public offering Wednesday, the price at opening dropped 15 percent below the IPO price, as reported by Nikkei.

This despite the fact that the IPO price of 900 yen (about $8.87) was at the lower end of the suggested IPO range, according to The Wall Street Journal.

And the share price got as low as 706 yen on Wednesday.

"The [IPO] pricing was wrong," Amir Anvarzadeh, director of Japan Equity Sales at BGC Partners, said in CNBC interview.

"They're very focused on the smaller screens, low-temperature polysilicon, which is still good business," he said. JDI's low-temperature polysilicon technology is used in Apple's iPhone 5S display.

"[But] in the case of small screens [and] low-temperature polysilicon, we're seeing the Taiwanese coming [on] and the Koreans have moved on to AMOLED," or active-matrix organic LED, according to Anvarzadeh. The latter is used by Samsung on its popular Galaxy smartphones, for example.

JDI is a merger of the display businesses of Sony, Toshiba, and Hitachi, all of which had been crippled by losses in their respective small display businesses.

The merger -- which received major financial backing and support from the Japanese government -- looked doomed at first, but eventually, in 2010, the company was formed.

Subsequently, JDI became a major supplier of displays for Apple's iPhone.

For the nine months through December, Japan Display reported a profit of 33.5 billion yen ($331 million), exceeding the previous full year profit by about 10 times, according to the Wall Street Journal.

JDI has about 16 percent of the smartphone display market, the largest share of any one company.

"The question mark is what happens after this year when [Taiwanese] companies like AU Optronics (AUO) begin to bring supply in?" Anvarzadeh asked, who said repeatedly during the interview that the Taiwanese are just now beginning to get their production yields to levels that are competitive with market leaders like JDI.

About the author

Brooke Crothers writes about mobile computer systems, including laptops, tablets, smartphones: how they define the computing experience and the hardware that makes them tick. He has served as an editor at large at CNET News and a contributing reporter to The New York Times' Bits and Technology sections. His interest in things small began when living in Tokyo in a very small apartment for a very long time.

 

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