From Tokyo: The global display industry tells a cautionary tale about what happens when a manufacturing leader fails to adapt. Japan once dominated the flat-screen sector through companies like Sony, Panasonic, and Hitachi. Today, China's global share of LCD production has grown from 0 percent in 2004 to 72 percent in 2024, and its OLED capacity is expanding rapidly as well.
Now, in 2025, the US and Japan signed a trade agreement which included a commitment by Japan to invest $550 billion directly in the US, with funds targeted at industries such as energy, critical minerals, pharmaceutical and medical, shipbuilding and semiconductor manufacturing. As part of this commitment, the Japanese government is considering building a display factory as its second project under the investment pledge, with Japan funding the construction of a US factory while Japan Display Inc. operates it.
The factory would be worth up to $13 billion, according to reporting by Nikkei Asia. The final plan is expected to be announced at the US-Japan summit on May 19, alongside other proposed investments in nuclear power and copper refining.
Japan Display's Struggle
Japan Display Inc. was created in 2012 when the Japanese government backed a merger of the display divisions of Sony, Toshiba, and Hitachi. The company was meant to consolidate Japan's remaining strength in a strategic industry. Instead, the company has spent a decade fighting for survival.
The inflection point came when Apple switched to OLED screens on the iPhone, because Japan Display was the main supplier for its LCDs before. The Japanese government invested more than 460 billion yen in Japan Display but exited last year, losing about a third of its investment.
The stock market reacted sharply to news of the potential US factory. The company's stock price jumped dramatically by 80% on Monday, bringing the financially troubled firm's market value to 190 billion yen, equivalent to approximately $1.2 billion. Japan Display itself has declined to comment on the plans.
The Chinese Challenge
The real driver for this US-Japan partnership is the scale of China's dominance. Research firm Counterpoint forecasts China will continue to dominate global display capacity, expanding its share from 68% in 2023 to 75% in 2028. This acceleration reflects decades of state-backed investment and industrial planning.
China's display industry has grown as a result of extensive subsidies, rampant intellectual property theft, and economies of scale. Chinese display maker BOE alone received an estimated $3.9 billion in subsidies from Chinese national and provincial governments over the past 12 years, and China's massive subsidisation of the industry has driven down prices, knocking many foreign competitors out of the market.
The US sees both an economic and security problem. Concerns persist in the US about reliance on Chinese-made displays for fighter jets and tanks, and having allied Japan produce displays on American soil would address these concerns. The new factory would be aimed at not only strengthening Japan-US ties, but will also rival the high-volume, low-cost production China has mastered.
A Strategic Niche, Not Mass Market
The proposed plant would not attempt to compete with China in consumer electronics. Instead, the new US-based fab will focus on delivering high-performance displays for critical industries including defence, automotive, and medical applications. Japan Display now manufactures displays for defence, medical, and automotive applications rather than smartphones and TVs, markets dominated by Samsung Display, LG Display, and Chinese firms.
This represents a retreat from Japan's position as a global consumer technology powerhouse, but it reflects a realistic assessment of where Japanese companies might still compete. Building a new display factory is extremely expensive, so partnering with Washington makes sense from both a financial and geopolitical standpoint.
The project sits in a broader context of Western governments investing heavily to rebuild manufacturing capacity in semiconductors and related industries. Whether a $13 billion facility can restore Japan's standing in displays, however, remains uncertain. What is clear is that Japan recognises the cost of losing technological leadership in strategic industries, and the US is learning the same lesson.