[Tech Talk] Why Did Japan's Semiconductor All-Star JOLED Fail?

Proactive Investment in Cost-Reducing New Technology
Failure in Yield Management Leads to Closure
Shows the Risks of 'Blind Faith in New Technology'

Japan's leading 'Organic Light Emitting Display (OLED)' manufacturer JOLED has entered bankruptcy protection proceedings. As a company that was highly anticipated as the last hope of Japanese display technology, the impact on the domestic industry in Japan is expected to be significant.

JOLED was established through the collaboration of Japan's top technology companies such as Sony and Panasonic. It gained industry attention by pioneering the adoption of the latest OLED mass production technology, 'inkjet printing.' Armed with Japan's best talent, capital, and advanced technology, why has this company been pushed to the brink of closure in less than a decade?

Catch up with Korea... JOLED, the culmination of Japanese technology

JOLED logo [Image source=JOLED]

JOLED was jointly established in January 2015 by Japanese technology companies including Sony, Japan Display Inc. (JDI), Panasonic, and the public-private investment fund INCJ. Sony was once a global leader in electronics, JDI was formed by consolidating small and medium-sized display businesses in Japan, and Panasonic has a long history in audio and TV equipment. With these companies representing Japanese display technology and the government forming a united front, JOLED attracted worldwide attention from its inception.

The reason Japan was desperate about displays was that its display industry was in decline at the time. Korea had taken the lead in OLED, and China in liquid crystal displays (LCD), so this was a desperate attempt to regain past industrial dominance.

JOLED particularly aimed to secure new technology leadership in the OLED field. In 2017, it unveiled the world's first OLED product using the 'inkjet printing' method. At that time, Samsung and LG Display, which dominated the market, produced displays using the conventional 'deposition' process, but JOLED tried to surpass Korean companies in both quality and price competitiveness by using this new process.

20-30% cheaper than existing methods... Betting on 'inkjet printing'

JOLED was a leading company in mass production of displays using the 'inkjet printing' process. [Image source=JOLED]

OLED refers to a screen where the elements called 'pixels' emit light themselves. Therefore, the quality of OLED depends on how well the pixels are formed on the substrate, and currently, the deposition method is used.

Deposition is a process where the substrate is placed inside a vacuum chamber that creates a vacuum environment, and various organic layers, which are the materials for the pixels, are sprayed onto it. These organic layers settle sequentially on the glass substrate to form pixels. After safely sealing these organic layers with a protective layer and completing additional processes, the display is created.

While the deposition process has become the mainstream technology for OLED manufacturing, it has the disadvantage of requiring enormous capital investment, such as building vacuum chambers. Samsung and LG have been able to bear these costs due to long-term investments in their factories, but the startup JOLED could not keep up. This is why JOLED bet on the new inkjet printing technology.

Inkjet printing is a method of directly printing pixels onto a glass substrate. The organic layers forming the pixels are sprayed like printer ink, and its biggest advantage is that it is much simpler than deposition. In theory, it can reduce production costs by about 20-30%.

After selecting inkjet printing as its main process in 2017, JOLED completed a factory in November 2019 and started producing 10-32 inch panels at a scale of 20,000 units per month. The products JOLED planned to mass-produce were intended for various product groups such as TVs and automobiles.

Failure in yield management, mounting debt leads to bankruptcy filing

JOLED aimed to catch up with leading Korean companies such as Samsung and LG Display.
[Image source=Yonhap News]

However, problems arose here. Inkjet printing, a new technology not yet fully verified compared to deposition, had significantly lower yield management, meaning the ratio of producing stable good products was poor. As the defect rate of mass-produced products increased, so did the amount of bad inventory, which increased the company's debt burden. It also undermined trust with customers who needed stable product supply from the manufacturer.

In fact, JOLED attempted to supply automotive displays to the Japanese automaker 'Lexus,' but failed to achieve stable yields and the deal was ultimately canceled in 2021. During this time, JOLED had to invest huge capital to stabilize the inkjet printing technology. The inkjet printing method, adopted to save costs compared to Samsung and LG, ironically turned into a 'money pit.'

Ultimately, on the 27th (local time), JOLED filed for civil rehabilitation (bankruptcy) proceedings at the Tokyo District Court. The company's accumulated debt reached 33.7 billion yen (approximately 33 billion KRW). As a result of this bankruptcy process, both of JOLED's OLED panel factories will close, and 280 employees will be laid off. About 100 research personnel are expected to move to JDI.

A case showing that blind faith in new technology is dangerous

JOLED's bankruptcy demonstrates that excessive reliance on new technology in capital-intensive manufacturing industries is dangerous. In fact, domestic companies as well as Chinese latecomers were testing various display process methods including inkjet printing. However, despite the clear cost advantage of printing methods over deposition, they waited for the technology to mature due to difficulties in managing defect rates.

Ironically, OLED powerhouses like Korea and China are now gradually attempting to transition to inkjet printing processes. In November last year, the US display equipment company 'Kateeva' announced it would supply its inkjet equipment to Samsung Display. This equipment is expected to be used in Samsung's next-generation OLED mass production.

Chinese display companies BOE and CSOT also unveiled panels manufactured using inkjet printing processes at the 'International Information Display Society' held in California last year. About eight years after JOLED introduced inkjet printing OLED to the world, advanced companies have recognized its value.