JOLED bankruptcy and reorganization affects TCL Huaxing

On March 27, Japan’s JOLED announced that it had applied to the Tokyo District Court to initiate a bankruptcy reorganization procedure called “civil regeneration” and that it had been accepted. Will the 30 billion yen that TCL CSOT invested in JOLED be in vain?



In fact, TCL Huaxing's investment in JOLED is not a purely financial investment, but to license its technology and cooperate with it to overcome the technical bottleneck of large-size printed OLEDs. However, TCL Huaxing's interests may still be damaged by the "civil regeneration" of JOLED. However, based on the principle of prudence, TCL Huaxing has basically made corresponding asset impairments in the past two years. This incident will have little impact on TCL Huaxing’s subsequent operations.

JOLED bankruptcy reorganization layoffs

JOLED was established in January 2015 by JDI, Sony and Panasonic with funding from the Japanese Industrial Innovation Agency INCJ. It is mainly engaged in the research and development, production and sales of printed OLED panels. The manufacturer has mastered the world's leading OLED material printing and film forming technology, oxide semiconductor technology, flexible panel and other related technologies. It is the first panel manufacturer in the world to mass-produce inkjet-printed OLED and the only manufacturer to mass-produce inkjet-printed OLED.

JOLED printed OLED technology is forward-looking, and if it achieves a comprehensive breakthrough, it may revitalize the Japanese display industry. In order to promote the development of JOLED, INCJ has continued to provide blood transfusions to it in recent years. In 2019, with the financial support of DENSO (Japanese Denso), INCJ and other means, JOLED renovated the old JDI factory. Invested in building a 5.5-generation inkjet printing OLED mass production line.

JOLED originally planned to start mass production of printed OLEDs in 2020, but due to the impact of the epidemic and financial constraints, the mass production time had to be postponed. After several twists and turns, JOLED's printing OLED production line was finally put into production smoothly in 2021. However, the good times did not last long, and JOLED has never been able to get rid of the loss situation. In March 2022, JOLED had sales of 5.6 billion yen, a net loss of 23.9 billion yen, and liabilities exceeding assets.

As JOLED's losses continue to expand, bankruptcy and reorganization may be the best option. Currently, JOLED has total liabilities of approximately 33 billion yen ($250 million) and announced its withdrawal from the display manufacturing and sales business, closing The closure time of the production bases in Nomi City, Ishikawa Prefecture and Mohara City, Chiba Prefecture has not yet been determined. Part of its business will be classified into JapanDisplay and INCJ (formerly Japan Innovation Network Corp.).

According to JOLED, the company has about 380 employees, of which the R&D business will be taken over by JDI, and about 280 employees in the non-R&D department will be laid off in sequence.

The person in charge of JOLED apologized for the trouble caused by the bankruptcy to relevant customers and personnel. INCJ President Katsumata Mieyei was very disappointed with JOLED's bankruptcy and expressed "heartbreaking pain."

Printed OLED technology is not yet mature

In fact, the outcome of JOLED’s bankruptcy and reorganization has been doomed from the beginning.

Inkjet printing OLED panel technology has a bright future. Under ideal conditions, the production cost is expected to be 20-30% lower than that of evaporated OLED. JOLED has been committed to promoting the mass production of inkjet printing OLED. As early as 2016, JOLED opened a 4.5-generation inkjet printing OLED panel pilot line at the Ishikawa Technology R&D Center. After more than a year of exploration, it successfully produced a 21.6-inch 4K OLED and successively supplied it to Sony Medical Display and Asus Display.

After the mass production of JOLED's 5.5-generation inkjet printing OLED production line in 2021, it plans to bring higher brightness and higher drive speed inkjet printing OLEDs to the market in 2023, and to put flexible inkjet printing OLEDs on the market around 2023-2024.

But it is not easy to improve the yield and performance of JOLED inkjet printing OLED. Sources in the display industry chain pointed out that at present, the price of ink used for printing is high, and inkjet printing OLED technology is immature, so the yield is relatively low. Low and low output, which drives up the production cost of inkjet printing OLED. Compared with evaporation OLED products of the same specification, the cost performance advantage of inkjet printing OLED is not reflected, but is more expensive. Because evaporation OLED has formed a certain industrial scale, the industrial chain cost has been compared with the early stage of the industry. There has been a significant decline.

Originally, JOLED wanted to improve its operating conditions by developing displays, vehicle-mounted products, technology licensing, and combination businesses, but the progress was not smooth. The JOLED and Lexus automotive OLED cooperation project fell through due to lack of progress. It is understood that Lexus has been cooperating with JOLED to develop 10-inch automotive OLEDs for four years. However, JOLED lacks experience in mass-producing automotive OLEDs, and there are certain technical difficulties in double-layer tandem inkjet printing of OLEDs. Lexus stopped cooperating with JOLED and turned to LG Display.

In addition, in the past two or three years, due to factors such as the epidemic, inflation, and the entry of Korean manufacturers into the medium-sized OLED market, the JOLED business has Development has also been further hampered, and business conditions have continued to deteriorate. Moreover, the fixed amortization of JOLED's early equipment was relatively large, it was unable to make ends meet, and it lacked sustained external financial support, causing a break in the capital chain.

TCL Huaxing worked with JOLED in 2020 Signed an investment agreement to invest 30 billion yen in JOLED and obtain 10.76% of the latter's shares, temporarily alleviating JOLED's long-term financial difficulties. border-box; clear: both; min-height: 1em; color: rgb(34, 34, 34); letter-spacing: 0.544px; text-indent: 0px; font-family: PingFangSC-Regular, "Helvetica Neue", Helvetica, "Microsoft Yahei", Arial, "Hiragino Sans GB", tahoma, SimSun, sans-serif; min-width: 100%; font-size: medium; line-height: 32px; overflow-wrap: break-word !important;'>TCL Huaxing hopes to cooperate with JOLED in printing OLED Carry out in-depth technical cooperation in the field, strengthen technology and industrial chain advantages, and accelerate the breakthrough of large-size printed OLED mass production bottlenecks, not for the purpose of financial returns. In the past two years, TCL CSOT has accumulated product development and process technology on its production line, obtained patent authorization related to printed OLED, and developed the world's first 65-inch 8K printed OLED sample. It has further opened up Japan's equipment and material industry chain and accelerated the advancement of mass production technology. The yield and effect of mass production of TCL CSOT's printed OLED technology have been recognized by many customers. TCL Huaxing continues to be optimistic about the development prospects of printed OLED technology and the industrialization of printed OLED in China.

After JOLED enters bankruptcy and reorganization procedures, TCL CSOT's previous investments may be affected. Industry insiders pointed out that the regeneration process is equivalent to a simple bankruptcy reorganization, with more initiative on the debtor's side, and a supervisory committee selected by the court to oversee the progress of the regeneration process. OK. A regeneration plan is formulated based on the consent of a certain number of creditors and approval by the court, and is executed by the debtor. JOLED's "civil regeneration" may have two impacts on shareholders: one is that the regeneration plan allows for capital reduction, which may lead to a reduction in shareholders' rights; the other is that if JOLED still does not operate well after the regeneration process, small shareholders will still suffer losses on their investments. As a minority shareholder of JOLED, TCL Huaxing’s interests may be damaged.

However, TCL Huaxing had some foresight regarding JOLED’s bankruptcy and reorganization and had already made corresponding preparations. According to reports, TCL Huaxing has basically made corresponding asset impairments in the past two years based on the principle of prudence. This incident will have little impact on TCL Huaxing’s subsequent operations.