In early February Toshiba Corporate Senior Executive VP Fumio Muraoka was quoted by Nikkei Business Publications as saying — in regard to Toshiba Mobile Display"s (TMD’s) small and medium-sized industrial LCD business — "’We are now discussing all options including withdrawal from the business."

Ken Werner
Senior Analyst and Editor

This created a dual uproar. The first part of the uproar, understandably, was from TMD’s distributors and customers who wanted to know, in some cases desperately, whether TMD would continue to be a reliable source of supply.

The second part was initiated by the ignoramuses of the blogosphere (the ignosphere?) who didn’t know that TMD has virtually nothing to do with Toshiba’s successful TV business and started blogging hysterically that Toshiba America was abandoning the TV business. That hit the mainstream press but died down in a couple of days.

But the real story — the uncertainty of TMD’s future — remained. Then Nikkei published a "correction notice:" In the last paragraph of the original article, we wrote, "’We are now discussing all options including withdrawal from the business,’ Muraoka said." However, we deleted the phrase "including withdrawal from the business" after the public relations office of Toshiba Corp claimed, "Though Muraoka said Toshiba is discussing all options, he did not mean those options include withdrawal."

Of course, this wasn’t a correction of any error on Nikkei’s part. It was Toshiba’s PR department "correcting" the statement of its Corporate Senior Executive VP because he misspoke. But did he misspeak in the sense that the original statement was not true, or that it was true but he didn’t intend to say it? And that’s where the story sat.

Until now.

Yesterday, AUO and TMD announced it had signed a memorandum of understanding with TMD to buy TMD’s Gen 4.5 LTPS-LCD fab in Singapore. From the Taiwan-centric viewpoint of the Taipei Times, the deal will "enable [AUO] to enter the high-end notebook computer and mobile phone businesses. This is the latest in a string of countermeasures unveiled by the Hsinchu-based flat-panel maker as it competes with Chimei Innolux Corp, allowing AU Optronics to broaden its product portfolio in terms of technologies rather than boosting capacity."

The MOU states that AUO will purchase all of the shares in AFPD Pte Ltd, a TMD subsidiary. In a joint statement, AUO CEO Chen Ai-juh said, "AU Optronics’ competence in the high-end display market is further strengthened by AFPD’s fab capacity, talented workforce and technologies. The acquisition could also help place AU Optronics in a special strategic position in slim notebooks and smart phones for high-end markets and new application markets such as tablet PCs."

The Singapore plant ships a million notebook panels a month to leading computer makers, including Dell, Sony and Lenovo Group, reported Taipei Times reporter Lisa Wang. The plant has a capacity of 45,000 sheets of glass per month, which accounts for 30% of TMD’s overall capacity. TMD plans to continue using some of the plant’s capacity for its customers, an AUO spokesperson said.

AUO operates a 3.5G LTPS fab in Taiwan, but the Singapore plant is reportedly the most advanced LTPS fab currently in operation. TMD will continue to operate two smaller LTPS fabs in Japan, which are restricted to making small and medium-sized panels. The company had previously closed a Gen 2.5 and Gen 3.5 plant, which made a-Si LCDs, and the equipment to a Chinese joint venture, as reported in DD last August.

TMD has been losing money for an extended period, and is expected to report an operating loss of ¥28B for the fiscal year ending March 31, with sales decining 18% to ¥210B, and the global market for small and medium-sized LCD panels declined 13%, according to DisplaySearch.

So TMD is trying to raise cash and reduce fixed costs. The company said it will work to raise the capacity utilization of its plants in Japan, and focus on displays for smart phones and vehicular applications.

The small-LCD business continues to consolidate, as it must. TMD is circling its wagons around a shrinking business, perhaps betting it will be one of the last men standing when the consolidating is done. Or are there other shoes that have not yet dropped?

Note: Due to the Good Friday Holiday, there will be no Display Daily tomorrow, April 2.