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Japan Display bets on dashboard flash for drivers

The world's biggest supplier of car display panels says the shift to electric cars will give its business a boost

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JDI forecasts sales will grow 40 per cent by March 2020. The company, which already supplies about 30 per cent of the European car market, is expanding in the US, Japan and China.

Tokyo

FULLY digital screens are replacing speedometers and dials in vehicles, making industry leader Japan Display Inc (JDI) optimistic about boosting sales to global car-makers.

While most new models usually have a centre information panel for maps, entertainment and other functions, manufacturers are also increasingly replacing the dashboard facing the driver with a flat screen. Look inside the latest BMW or Mercedes-Benz, chances are Japan Display made the panel.

Replacing instrument clusters with screens is challenging because they need to be more reliable and withstand swings in temperature, while providing critical information to the driver.

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That also makes them more expensive and gives display suppliers the opening to demand higher margins, making them an attractive enterprise.

Japan Display, the world's biggest supplier of panels in cars, is betting that the shift to electric vehicles will make screens the key selling point for any car, as drivers pay more attention to the interior aesthetics of automobiles than what is under the hood.

Holger Gerkens, who heads JDI's automotive business, said in an interview: "It used to be all about the engine - how many cylinders, how much horse power, the sound of it - but with electric vehicles that's all gone. How do you create attraction? You can do a lot with displays."

Digital dashboards offer advantages to drivers, for example changing the style and amount of information for different driving modes, making maps more prominent when needed. For now, they are mostly used in high-end cars made by Audi, Mercedes-Benz and some supercar manufacturers.

JDI's automotive operations generated 100 billion yen (S$1.23 billion) in revenue in the last fiscal year, about 14 per cent of its total.

The company forecasts sales will grow 40 per cent by March 2020. JDI, which already supplies about 30 per cent of the European car market, is expanding in the US, Japan and China, Mr Gerkens said.

That could be welcome news for investors, who saw the company's shares decline 32 per cent last year. JDI's stock was down 1.6 per cent at mid-day on Thursday. The Japanese company controlled 19 per cent of the US$6.7 billion global market for automotive displays last year, said IHS Markit. LG Display was second with 14 per cent.

Damian Thong, an analyst at Macquarie Group Ltd, said: "It's a combination of high variety and low volume, but the automotive business could potentially offer higher margins. The ability to do this cost effectively will be a crucial test." Sluggish global smartphone sales, which make up about 80 per cent of revenue, are also behind JDI's bid to increase automotive sales.

In addition, Apple Inc, the company's biggest customer, is shifting to next-generation organic light-emitting diode displays, which JDI does not produce in mass quantities. Samsung Electronics Co and LG Display Co supply most of the world's OLED screens.

Adoption of OLEDs in cars will probably take longer. Unlike liquid-crystal displays, OLED pixels can glow on their own and do not require a backlight, which makes them thinner and more energy efficient. These are significant advantages when it comes to smartphones, but auto-makers are likely to be more concerned with OLED's limited lifetime and considerably higher price, Mr Gerkens said.

Japanese companies were the first in the world to commercialise flat-panel technology, but could not keep up with South Korean and Taiwanese rivals in capital investment and price competition.

JDI was created in 2012 in a merger of the troubled screen-making units of Toshiba Corp, Sony Corp, and Hitachi Ltd. JDI embraced a strategy of focusing on higher-quality, smaller-sized screens, which has helped it to gain a key foothold in the car industry.

"We are moving away from flat rectangular displays. The future will be more and more design-driven," said Mr Gerkens. BLOOMBERG