Canon assumes control of SED JV from Toshiba

January 15, 2007 – In an effort to overcome legal concerns with a US licensor, Canon Inc. is taking full control over its 50-50 joint venture with Toshiba Corp. to bring to market a new display technology, which promises cost and quality advantages in cost and quality — and is potentially the first significant major opportunity to bring nanoelectronics into a volume-produced product.

The move is seen as a way to smooth a dispute with US firm Nano-Proprietary, which claims the JV with Toshiba violates a 1999 licensing deal with Canon. But the Austin, TX-based firm, which filed suit in April 2005 against Canon and its US subsidiary, says it’s not backing down unless it gets a new deal with “reasonable terms.”

The dispute centers on a new display technology, surface-conduction electron-emitter display (SED) technology, which could promise better picture quality and consume less energy than current FPD technology such as liquid-crystal displays (LCD) and plasma. Canon and Toshiba already had delayed the introduction of SED-based TVs by more than a year in an effort to drive down costs and combat steep price erosion, noted Reuters, adding that the two also scrapped plans to show off a 55-in. SED TV at this month’s Consumer Electronics Show in Las Vegas.

Canon still says it plans to introduce SED-based television sets in Japan in 4Q07 as originally scheduled, although future mass-production plans will have to be reassessed. The company plans to review a planned $1.49 billion SED factory at a site owned by Toshiba in Himeji, western Japan, and likely will make the displays on a smaller scale at its own plant in Japan, noted Reuters.

Under the proposed reorganization, SED Inc. will become a wholly owned subsidiary of Canon effective Jan. 29. The JV’s current president, Toshiba appointee Kazunori Fukuma, will resign and be rehired by Canon to continue his role. Other Toshiba assignees on loan to the JV will continue their assignments during a transition period until Canon can independently establish the panel business. The unit, which currently employs about 550 workers, was formed in 2004 with capitalization of about US $87.5 million.

In a statement released Jan.12, Nano-Proprietary CEO Tom Bijou said he was “pleased” that Canon and Toshiba would continue to pursue their plans for SED technology, but that “restructuring of Canon’s ownership position does not resolve the pending litigation.” The company amended its lawsuit in April 2006 to include “fraudulent inducement and fraudulent non-disclosure,” citing Canon’s failure to disclose its relationship with Toshiba. A trial date had been set for March 2007.

Bijou noted, however, that although the license deal with Canon had been terminated, the company is “willing to enter into a new license agreement with Canon on reasonable terms.”


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