JDI at the forefront of display technology innovation

In the 80s and the 90s, Japan dominated B2C industries, but then we saw a steep decline where Japan shifted to a B2B based model. This is especially apparent in the semiconductor industry where today 40% of semiconductor machinery is supplied by Japanese firms. Could you give us your take on this development of the Japanese technology industry?

You’re right. While Japan continues to be extraordinarily capable and dominates a broad set of materials, equipment, and components that allow the global technology industry to run, Japan’s participation in the industry has migrated from a B2C model to a B2B model.

Driving that migration was both things going right and things going wrong.

What went right included Japan becoming wealthy. Throughout most of the post-war period, the yen was at 360 to the US dollar. By the end of the 1980s, the yen had strengthened to the low 100s, driving a massive increase in Japan’s national wealth. And being wealthy with a strong currency, Japan lost some of its cost competitiveness, so there were reasons to migrate production elsewhere.

The second thing that went right was globalism. Japan had the ability to build global supply chains that integrated enormously competitive and successful up-and-coming economies that were modeling their economic development models and trajectories on Japan. This was particularly true in Asia with Korea and Taiwan and then later China.

We should also look at what went wrong. Japan encountered a classic innovator’s dilemma, where Japanese companies were so dominant that they maintained the status quo, even though there were up-and-coming technologies and companies outside Japan that threatened their lead. In particular, Japan lost out in B2C product innovation, branding, and marketing, even though Japan’s ability to deliver B2B solutions across materials and equipment remained world-class due to Japan’s ongoing competitive advantages in high value-add and high precision manufacturing.

There was also a change in the global electronic industry’s “sub-business model,” if I could call it that. It went from a vertically integrated manufacturing model to an interconnected ecosystem populated with specialist firms. As part of this process, leading-edge Japanese equipment, materials, and component suppliers had new opportunities to supply customers globally, including the competitors of the big Japanese B2C firms. This eroded the big Japanese B2C firms’ ability to have differentiated capabilities relative to their global competitors.

Furthermore, enormous trade frictions during the 1980s threatened Japan’s ability to be integrated into the global economic system and the US security umbrella. In response, Japan moved production offshore in order to decrease trade tensions. This resulted in significant technology transfers from Japan to new production sites globally and the globalization of Japan’s manufacturing base, which was good for both the world and Japan, but also had the effect of reducing Japan’s domestic competitive advantages in manufacturing.

Fast forward to today, Japan continues to be very wealthy, with a current account surplus that adds daily to that wealth. It's the world’s largest creditor country. Japanese outflows finance activity globally. Japan has bypassed China to once again own more US securities than any country other than the United States itself. It has extraordinarily high capabilities across the global technology industry supply chain, being a critical supplier to pretty much everybody. And it also has an ongoing desire and challenge to figure out how it gets back into B2C in more size.

Japanese suppliers have been bringing production back to Japan in response to logistical disruptions due to covid and the depreciation of the Japanese yen under the US dollar. Do you believe that in the longer term, production can really come back to Japan?

Production is indeed migrating back to Japan. Bringing manufacturing back to Japan in order to shorten supply chains makes sense, both from an economic perspective and a geopolitical perspective. The one challenge of a global supply chain is robustness. If it is operating under fewer constraints that create fragility, then a global supply chain can work enormously well. However, when trade tensions or a pandemic disrupts it, then vulnerabilities that are created by long supply chains become highly visible, and shortening them is a positive.

The yen has weakened in the last three years. We started 2020 at about 100 yen to the US dollar and in 2023 it went to 150 and is now back to about 130. However, it's not clear to me that companies are making choices to move back to Japan based on their long-term view of the yen. It appears to be more of a case of hedging geopolitical risk and trying to shorten supply chains. That is the more fundamental driver of why we're seeing production activity migrating back here.

When we do see production migrate back here, there is the issue of labor. Japan is the oldest society in the world. Last year, only Okinawa experienced a population increase from all of Japan’s 47 prefectures. How will a company such as JDI cope with this population decline in terms of recruitment, but also in terms of domestic demand for your products?

Labor in Japan, and increasingly across most advanced industrial societies, is becoming scarcer and thus more valuable, and that is a good thing. We've had a multi-decade transfer of wealth from labor to capital. This has created political fissions, and arguably is one of the structural drivers of the rise of populism. Migrating value back to labor is both right and important in order to support political and economic stability. It’s a reality we should not fight, but endorse.

Given this population shrinkage, we need to recognize that our employee count will probably shrink over time and that we should use every means available to empower our employees to do the best work that they can. The classic solutions as a manufacturer are factory automation solutions, and we will continue to do that, but there's a whole host of processes to rethink across the board, including not just in our fabs, but everything we do in terms of design, development, and marketing.

Broadly speaking, technology is one solution for preserving and increasing productivity amidst population decline, so as a technology company JDI is trying to contribute. To give a concrete example, we have developed a next-generation display technology called eLEAP (environment positive; Lithography with maskless deposition; Extreme long life, low power, and high luminance; Any shape Patterning).

eLEAP is arguably one of the best display technologies on the planet. It is a next-generation OLED (organic light emitting diode) technology that offers revolutionary improvements over existing OLED. The problem with conventional OLED is that it uses metal masks in the production process. eLEAP is maskless, and removing metal masks from the production process allows eLEAP displays to deliver two times the brightness of conventional OLED.

The problem with metal masks is that they are big and unwieldy for accurately controlling deposition positions in the OLED production process. Masks require manufacturers to use super-wide tolerances. You can't put the pixels as close together as the deposition process would allow. eLEAP being maskless means you use finer deposition tolerances to generate a larger light-emitting pixel area and less black space. And with a larger light-emitting pixel area and less black space, you don’t have to run as much current density through the display to create the desired brightness. An eLEAP display with the same brightness thus has three times the lifetime of conventional OLED, because stress from the current density burns out OLED pixels over time.

These benefits are not just in the fab, but in the design process itself. Our engineers can do more because eLEAP allows for a much more efficient process. Going maskless with eLEAP also means that as part of a new display product design, you don't have to go through the process of creating masks, so eLEAP both decreases product development costs and increases development speed and productivity.

So to go back to your question, there has to be a broad rethink of the entire processes of the firm to empower our people and allow them to be more productive so that we can deliver JDI’s technologies to our customers with a lower headcount. Needless to say, having more productive employees who are creating more value means we can and are raising employee salaries.

The second thing that we are doing is seeking to keep our veteran employees with us. It used to be the case at big Japanese companies that when you’re 60 years old, it was about time to think about retirement from the company perspective.

To keep our employees, we’re redesigning the way we think about work and trying to be thoughtful about how to extend the ability of our highly capable veteran employees to stay with the firm for as long as they want to stay with us. Our approach is not “60 years old, don’t you think you're done?” It is “60 years old, let's continue to go forward together.” We also think this is an important societal contribution because lengthening the ability to work productively has a positive impact on the ability to fund the pension system and other social needs.

A big part of your METAGROWTH 2026 strategy is to be more environmentally friendly and to reduce emissions. Former Prime Minister, Mr. Suga, said that Japan needs to be carbon neutral by 2050 and the road map says by 2030 there needs to be a reduction of 46%. Just to go back to eLEAP, can you explain in more detail how it reduces material wastage, and how it overall allows for more efficient production processes?

The primary manufacturing breakthrough was that eLEAP is maskless and no longer has any material, equipment, and energy usage associated with metal masks. As a more energy-efficient production process, it also uses less energy and generates less CO2. Furthermore, conventional OLED requires cleaning the metal masks with toxic chemicals, and eLEAP gets rid of that cleaning process, simultaneously decreasing material usage and risks to local water supplies.

In addition, eLEAP supports higher fab utilization. Masks get clogged in the deposition process, so conventional OLED fabs require regular mask changes and cleaning. Because eLEAP is maskless and doesn’t require fab downtime for mask changes and cleaning, it can increase fab utilization by 20% to 30% or more.

Higher utilization is extraordinarily important because of the heavy capital expenditure requirements of the display business, with billions of dollars going into building fabs. Manufacturers thus seek to amortize the cost of their fabs over as many displays produced as possible, so higher utilization lowers display costs. eLEAP thus offers a powerful combination of environmental sustainability, superior performance, and lower production cost.

JDI has had, through its history, a series of technological breakthroughs, but has sometimes found it difficult to commercialize these smart ideas that were either ahead of their time or didn’t have the right price point for their current utilization. How will you ensure that this doesn't happen with eLEAP?

JDI was created via the merger of the global display technology businesses of Sony, Hitachi, and Toshiba, which brought together powerful capabilities to deliver world-class products to our customers. However, what was wrong with our product strategy historically was that we had world-leading performance but at a high price point. We didn’t necessarily deliver world-leading price performance. And it is price performance which is the ultimate driver of customer value.

Just to step back, displays are composed of frontplane and backplane technologies. The frontplane is technologies like OLED and LCD. Backplanes are less familiar to most consumers but use technologies such as amorphous silicon and oxide TFTs (thin-film transistors). The backplane is a computing matrix that sends electrical signals to the frontplane. The frontplane uses pixels to create images.

As we just discussed, eLEAP is a historic breakthrough in the frontplane. JDI has also generated a once-in-a-generation breakthrough in the backplane called HMO (high mobility oxide). What makes both eLEAP and HMO revolutionary is that they deliver superior technology at a lower cost. These are not “We've got a better technology, please pay more for it.” eLEAP and HMO are better technologies at a lower price.

That is the most important lesson we took from our history – that you need a compelling price point, and you need to be fast. Innovating quickly is good for customers and the world. Both eLEAP and HMO are examples of JDI generating breakthroughs at a speed our competitors could not match.

To give some more detail on HMO, its major contribution is that it reduces display power consumption by 40%. Oxide is a very mature technology for the backplane, and it's highly energy efficient. The problem with oxide is that it has low mobility, meaning it's not fast. Oxide, classically, is slow and cheap with a mature production process. It's easy to produce and has low power consumption, but it’s not suitable for high-performance displays in smartphones because of its low mobility.

We, therefore, created HMO, in which you take this mature technology and give it extraordinary performance capabilities. You're getting both high performance and a lower cost.

Technological innovation is what has brought much of the world out of poverty over the last several hundred years. It's enormously powerful if the benefits are shared broadly. There's a line of thinking about why businesses should avoid commodity markets, which is directly linked to profitability. We understand that. “Don't be the sixth company providing the same product, because, with that many competitors, you are unlikely to be profitable.” At JDI there is another deeper reason to avoid being a me-too competitor. We believe the fundamental purpose of a company is social contribution. The problem with being a follower is you are not contributing anything new to the world. JDI is deeply committed to creating breakthroughs that move the world forward.

eLEAP

Rælclear transparent display

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Your transparent interface technology, Rælclear, has 84% transmissivity, the highest in its class. It's also a technical achievement and a milestone for the industry because not only is it the most transparent but it also displays a super high-quality image, something, on both accounts, very hard to do from a technical point of view. How have you been able to achieve that by combining both those factors in one product?

Window glass is typically around 89% transmittance, so Rælclear is indistinguishable from glass. It is the most transparent display technology on the planet. Rælclear is also the only display technology in the world that offers two-way transparency. If you look at other transparent displays out there, the transparency is only from one direction, like a one-way mirror. JDI is using a completely different technology set than everybody else to generate both glass-like and two-way transparency.

So imagine you are in your kitchen, in your home, your office, your school, anywhere. With Rælclear, you no longer have this problem where the display gets in the way. It’s no longer a blocking physical object. It can be naturally and fully part of whatever space it is in. Right now, displays are walls. They should be windows. Rælclear delivers on that promise.

Of course, one of the biggest sectors where you're looking to innovate is the automotive sector, which is experiencing a very fast transition as we speak. 2035 has been set by Japan for transition to full EVs. EVs are already omnipresent across Europe, and Norway stopped selling petrol-engine cars last year. Could you tell us a little bit more about your company's technologies for mobility, this next generation of automobiles?

There are two technologies in particular that we're working on that are very important for automobiles. One is eLEAP, which as we discussed earlier is JDI’s next-generation OLED technology. What’s great about OLED displays is that with organic emissions you don't need a backlight, so they use less energy. Because they are light sources, backlights also interfere with display image contrast. Getting rid of the backlight thus generates both lower power consumption and higher contrast. An additional positive is that removing the backlight means that OLED displays are thinner because backlights use space.

Nonetheless, OLED displays have less than one percent market share in the global auto display market, unlike smartphones which are well underway in making the transition from LCD screens to OLED. Pretty much every high-end smartphone now uses OLED to take advantage of its superior performance characteristics.

What has been a barrier to OLED use in automobiles is a problem inherent in conventional OLED: organic diodes lose their ability to produce light over time. They get darker and lose their luminance noticeably over a few years. That's a big problem for the auto industry, where cars are used for typically seven years, 10 years, and 15 years.

Because eLEAP has three times the lifetime of conventional OLED, it is a breakthrough technology for automobiles. To have a display technology that is robust and rugged enough for a 10- or 15-year lifetime is critical. Having robust, low-energy consumption display technology is important to the user experience in cars, and it’s growing over time. Because of their requirements for long battery life, EVs in particular demand low energy consumption displays, which JDI is a world leader in.

To jump topics a bit, aren't we all done with “use it and throw it away”? We think it is important to give consumers a choice to keep their displays, as opposed to built-in obsolescence from displays losing their brightness over time. eLEAP gives consumers that choice by 3X-ing display lifetimes across all display categories, including automobile displays, smartphones, wearables notebooks, monitors, and TVs.

Going back to cars, for the display industry the auto sector is a growth driver. Back in the day, automobiles didn’t have displays in them, and now they're beginning to be everywhere – in the console, in the front seat, in the back seat. There is growth in vehicles, growth in displays per vehicle, and growth in display sizes themselves. This is positive for JDI: we’re number two in the world in automotive displays and the overwhelming number one for high-performance displays at the high end of the automobile market. JDI is capable of delivering performance, quality, and reliability at scale.

We're also number one in the world for heads-up displays (HUD). HUD technology is generally not standard in cars right now, and part of the reason why it's not standard is because combustion engines use a lot of space up in the front of the cabin, space you need for the HUD. When you move to EVs and get rid of the engine up front, you generate the space you need to put in the HUD.

What we think is really powerful about heads-up displays is that they're an important safety innovation. Instead of having to look down as a driver at the dashboard to check your speed and other information, you can keep your eyes on the road and get information right in front of you from the HUD. One of our goals is thus to make heads-up displays part of the EV revolution and a safety revolution for drivers.

Looking at the future, we're seeing novel applications. You just gave great examples in the transition to electric vehicles, but we're also seeing technologies such as virtual reality emerging. Where do you predict will be the new avenues for growth for display makers?

JDI is number one globally in VR (virtual reality) displays. We're the only company in the world that is currently in mass production of super-high resolution 1200 PPI (Pixel Per Inch) displays. That's an enormously high image quality. High-end smartphones will generally be between 400 and 500 PPI.

The reason why you need such high resolution for VR is that VR headsets use magnifying lenses to give the user a fully immersive experience and make the display larger and more encompassing. The lenses will typically be 7X to 10X magnification.

Users’ experienced VR display resolution can be calculated by dividing the resolution by the lens’s magnification multiple, so if it's a 10x lens and a 1200 PPI display, the experienced image is only 120 PPI to the user. This is why there is a voracious appetite to take resolution higher in the Metaverse and VR. 120 PPI feels a little bit like the good old days of Nintendo.

We can also create very high PPI using silicon instead of glass as a substrate for the display. The problem is that silicon is incredibly expensive, on the order of 5 to 10 times more expensive than glass, so it makes the displays totally non-economical. What makes JDI so successful is that JDI is the world leader in using glass substrates to create extraordinarily high-resolution displays at a compelling price for the consumer.

To be able to deliver high performance at low cost is the key to how we deliver value to the world. Rather than amazing technology at a price that no one can afford, we want to deliver amazing technology at an affordable price that allows people all over the world to broadly access that technology.

We'll find out together whether or not the Metaverse proves to be revolutionary – it is certainly possible. An alternative scenario is that as the immersive capabilities,  resolution, and speed of the technology get higher, VR could create a completely different kind of gaming, interactive, and entertainment experience. It will be more limited in scope than the full Metaverse, but still important.

You've spoken extensively now about these technologies, like eLEAP and HMO, and of course Rælclear, but I want to ask you about diversifying the business beyond just hardware. We know that you've installed your proprietary AI in Rælclear, which is a B2C product. Could you tell us more about how you're becoming a technology-based company, rather than just the hardware-based one you have traditionally been?

I'm not going to push back on adding software to our hardware because we have ambitions and activity in this area. Having said that, the key questions for us are where in the value chain should we participate, and what capabilities do we have that are unique and contributive. And here we think there continues to be an opportunity to create value and get rewarded for it through extraordinarily difficult high-precision, high value-add manufacturing expertise.

Sony’s CMOS sensors and TSMC semiconductor foundries are examples of powerful hardware businesses built around doing things that are hard for other companies. TSMC is not a software player, and it's not clear if it will ever be a software player, but it creates enormous value through its manufacturing excellence.

We've similarly chosen to do things that are hard rather than easy. Our engineers are generating first in the world, first in history breakthroughs. This is excruciatingly hard. That's part of the strategy, to do things that are really hard, because then you leave your competitors behind and create unique value for customers by building things that no one else can build.

Is the model of innovation all in-house, or are you looking for partnerships?

We believe in partnerships. eLEAP and HMO are such powerful technology breakthroughs that the idea that JDI would keep them to itself makes no sense if you're trying to move the world forward. eLEAP and HMO have the potential to replace current display technologies and become a new global display technology standard. There are other possibilities such as microLED and microOLED, but they are expensive, narrow in their applications, and hard to manufacture.

Let’s be very clear here: we don't have the production capacity and the capital to build every display on the planet. Partnering is the right choice. eLEAP and HMO also allow the global display industry to leverage the knowledge and capabilities of the existing ecosystem and innovate on top of it.

JDI’s business model is thus migrating towards using our strengths in technological innovation to serve as an R&D engine for the entire display industry. It is more of an ARM model or Qualcomm model, rooted in deep IP (intellectual property).

You are present across Asia, Europe, and North America with manufacturing capabilities in China and The Philippines. Which locations or regions do you see the most growth potential in for your METAGROWTH 2026 growth strategy? Where will you be prioritizing first?

We actually don't think about the world regionally, because we're very customer focused. We build our business around customers, and those customers are everywhere in the world.

Clearly, there's a lot of embedded economic and income growth in Asia, and we understand that and are committing more resources here. But to return to the first point, we have major customers in every region in the world, and we continue to be committed to intensely and tenaciously serving their interests wherever they have customers.

It's quite interesting to see someone called Scott Callon being the CEO of a company called Japan Display Incorporated, and you also have quite a unique background. We know you still also work for Ichigo Asset Management. On top of that, you've worked with the Japanese government as a counselor to help them redesign some corporate governance reforms. How does this background in the asset management sphere help you in your daily management here at JDI?

Just to go back in time, the key motivation for founding Ichigo in 2006 was to work on behalf of Japan and its future. I am an immigrant to Japan and am deeply grateful to all the people who helped our family build a life here.

Japan is aging demographically, so we can’t fund the future without higher returns. We need to do more with Japan’s enormous talent and wealth and capital stock. The choice of starting a Japanese asset manager in 2006 was thus intimately linked to wanting to work for Japan. Over time Ichigo also got involved in supporting companies, including during the global financial crisis.

Turning to JDI, we had discussions in 2019 and 2020 with the Japanese government about supporting JDI, and it matched Ichigo’s mission. JDI is a company with extraordinary capabilities that can both contribute to Japan and the world and generate extraordinary value for shareholders and all stakeholders.

When you run a public company, an essential element of the job is to serve your shareholders and their life savings. As a result, every public company has in effect two businesses: what is classically thought of as its main business and also an investment business on behalf of shareholders. You are working for customers and also investing for shareholders.

One of the big missions that you had was to restructure JDI, which you've done through a series of reforms. You redesigned the corporate governance of the company, for example. More recently, last year, you sold one of your subsidiaries in China. As you look back, since you've become the Chairman and CEO, what are some of the key changes you think you’ve made, and looking at the future, what are some of the changes left to be made?

The key change that I have been involved in has been looking hard at our technology capabilities and focusing them on breakthroughs and gamechangers for the global display industry. I joined the firm in 2020 and spent a lot of time with our Chief Technology Officer on what the technology roadmap looked like. If I can use a baseball analogy, there were a lot of singles and doubles.

You never know if you're going to be able to bring these to fruition, but it did feel like at the time we shouldn't be going after singles and even doubles. Instead, we should focus more on home runs, even grand slams, and seek to drive transformational technology development that can change the world.

That was the biggest shift: we have focused our resources on breakthroughs and gamechangers. This defines who we are. We are a technology company working for transformational breakthroughs that change the world. We think that continues to be the right approach, so what you'll see from JDI going forward is more announcements of first-ever, Global No. 1 technologies.

In terms of the technology set that we have already made public, you'll see continuing innovations in Rælclear, and we will take eLEAP and HMO into mass production next year. The biggest challenge for JDI right now is that we're working to get all these technologies out the door at once. And it's not as if we have created just one breakthrough. We have four or five Global No. 1 technologies – JDI technologies that are literally the first ever in the world – that we’re coming to market with. It is incredibly challenging and exhausting and exciting.

Let's say we come back to interview you again on the last day of being CEO. What would you like to tell us about your goals and dreams for the company by that time, and what would you like to have achieved by then?

Our shared goal at JDI is to be a transformational company that moves the world forward. The next 24 months of bringing eLEAP and HMO into mass production are going to be critical to demonstrate that's who we are. If we can get to an organic process where JDI has ongoing technology breakthroughs that no one has ever created before, bringing together extraordinary performance and low cost, that would be deeply meaningful.

Technology has the ability to change the world. There has been a productivity stall in the service sector across the world, and as a technology company, we want to deploy our capabilities to help solve this.

Also, Japan is a society very motivated by social contribution and caring for people and communities. As an immigrant to Japan, this is something I believe in. That's our requirement - to deliver on that promise.

That's why I hope on my final day that we can say that we're delivering products that are helping people live better lives, we've got a pipeline rich with innovations, and we're continuing to move the world forward.

JDI’s mission is PersonalTech for a Better World. We truly believe in it. Displays are a foundational technology for modern life. We all use them. We use them at home. We use them at work. We use them everywhere. JDI displays are being used by millions of people across the world every day.

Thank you so much for the opportunity to introduce JDI. We’re really grateful.