Japan Inc May Win Sharp Battle, but Lose the Lcd War

Title of the article: Japan Inc may win Sharp battle, but lose the LCD war

Publication: Reuters

Date:21th January 2016

Article link: http://www.reuters.com/article/us-sharp-m-a-jdi-idUSKCN0UZ19A

Summary

Japan Display was founded three years ago as a joint venture technology company for Japanese LCD market. It is a backed up deal by government and consist LCD section of main Japanese companies: Sony, Toshiba and Hitachi (Panasonic was added to this joint venture later)

Right now Sharp which is another Japanese LCD producer is in trouble and many foreign companies wants to make an acquisition because of its patents and market share. But it seems Japan Display with government back up is closer than anyone to finish a deal with Sharp.

Both those companies don’t just produce LCD for TV but also for other companies as supplier too. Apple is one of major customer for both companies and a joint venture will make them more powerful in negotiation with customers such as Apple.

In other point of view adding another almost bankrupted company to Japan Display doesn’t make a lot of sense considering all three main companies doesn’t show profit in LCD market and losing it to their competitors (mostly to Samsung and LG ). On the other hand it will be good for Sharp because it reduce R&D and innovation costs.

At the end of the day it seems that this deal is more concerned by national pride as comparison to economical business factors.

There are few questions regarding this deal:

1. What is the impact of these kind of deals on companies’ brands? If they are using exactly same technology for their LCD then do they lose their competitive advantage over each other? There will be five different brand with exactly same technology
2. How much government should back up a company because of national pride? In last 3 years Japan display stock value dropped almost 70% and all those companies have difficulties in LCD market and doesn’t show much benefits. Is it still a good idea to continue a wrong strategy by government and add Sharp to the list and lose more or is it better some foreign company take over Sharp and make it successful?
3. Creating a company that includes of many of brands may have some legal problem over the world. May they have some punishment in US or Europe if Japan continue these kind of deals in contrast with anti-trust laws in other countries?

Microsoft is participating in an ongoing legal dispute with the United States Government since 2014, regarding a warrant that was served to Microsoft in order to obtain access to e-mails stored in an Irish data center pertaining to a drug investigation. In 2014, The US courts ruled in favor of the US government with claims that Washington has jurisdiction of the company because it is US based, and it can impose upon Microsoft to hand over data stored even if it is held abroad.