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December 19, 2013

Taiwan Display to Acquire Shares in a Taiwanese Display Module
Manufacturer and Establish a New Subsidiary in China

Japan Display Inc. (President: Shuichi Otsuka; JDI) today decided to make Star World Technology Corporation (8266.TWO; Representative: Zhengliang Xie; STC), a Taiwanese manufacturer of LCD display modules, into a subsidiary of Taiwan Display Inc. (Representative Director: Ting-Chen Hsu; TDI), JDI's wholly owned subsidiary, by acquiring approximately 80% of STC's outstanding common shares through TDI. JDI also decided to establish a new subsidiary of TDI in Shenzhen, China. The 80% of outstanding common shares in STC will be acquired by TDI when the Taiwanese manufacturer increases its capital through private placement. Both companies will become consolidated subsidiaries of JDI.

As described in the Announcement"Japan Display Inc. Establishes a New Subsidiary in Taiwan", October 23, 2013, the principal objective of TDI is to expand business in the market for small and medium-sized displays, its main business domain—particularly in the Chinese market, which is growing rapidly. In order to successfully expand business in the Chinese market, it is extremely important to establish a speedy and flexible operational system that meets diverse customer needs in addition to enhancing cost competitiveness. TDI believes that it is indispensable to focus on the Chinese market and locally establish and maintain all necessary functions such as design, module production, and sales and quality support in China.
From this perspective, TDI decided to obtain a local module production base by making STC, which owns a factory in Zhuhai, China, into its subsidiary and to establish a new subsidiary in Shenzhen, China around the end of January, 2014 to sell and design products, and provide product quality support, to Chinese customers.

1. Overview of Making STC a Subsidiary of TDI

(1) Outline of the procedures
As of today, TDI executed a Share Subscription Agreement ("SSA") with STC. Pursuant to the SSA, upon a resolution of the extraordinary shareholders' meeting ("EGM") of STC and a resolution of the board of directors' meeting of STC (scheduled in April 2014), TDI intends to acquire approximately 80% of the outstanding common shares in STC with a total subscription price of approximately NT$374 million. Before the signing of the SSA, STC's shareholders' meeting resolved to conduct a capital reduction, which is expected to be consummated by the first quarter of 2014. Therefore, the number of shares to be subscribed by TDI and the price per share to be paid by TDI will be adjusted to reflect the said capital reduction (before the adjustment for STC's capital reduction, TDI is subscribed to purchase 207,914,600 common shares of STC at a price per share of NT$1.80). JDI or TDI is required to obtain foreign investment approval ("FIA") from the Ministry of Economic Affairs in Taiwan. TDI intends to complete the transaction as soon as FIA is obtained, which is estimated to be completed in June, 2014.

(2) Risk of private placement not being executed
This private placement is undertaken upon negotiation between the managements of TDI and STC's founder and his family on a friendly basis. Given that STC's founder and his family own more than 50% of STC's outstanding shares, there is expected to be no hurdle for gaining resolution at STC's EGM unless any material phenomenon arises.
When a private placement takes place in Taiwan, however, under the Taiwanese law the subscription price stipulated in the share subscription agreement between the parties concerned is strictly a provisional one, and will be subject to the price authorized by the issuing company's shareholders' meeting. In order to execute a private placement at the provisional subscription price, the provisional subscription price must be above the price obtained by multiplying the reference price, derived from the market price of the company's shares, prior to the date that the company's board of directors approves the final subscription price (for this transaction, a meeting of STC's board of directors will be held around April 2014), by a discount rate authorized by STC's EGM and based on opinions that are obtained from independent experts such as accountants (the "Discounted Price" ). For this reason, if the price of STC's shares rises sharply for some reason or other, exceeding expected levels prior to the day of STC's board of directors meeting (scheduled for around April 2014), and if the provisional price of NT$1.80 per share (before adjustments for STC's capital reduction) agreed to between TDI and STC falls below the Discounted Price, there is a risk of that the private placement will not be executed, as Taiwanese law will prevent the provisional price of NT$ 1.80 per share from becoming a definitive subscription. As a result, one of the condition precedents in the SSA for the allocation of shares to TDI would not be met.

(3) Corporate Overview of STC

  1. ① Company Name:Star World Technology Corporation
  2. ② Headquarter:Kaohsiung, Taiwan
  3. ③ Chairman and General Manager:Xie Zhengliang
  4. ④ Business:Manufacturing of modules for liquid crystal displays
  5. ⑤ Date of Incorporation:January 1999
  6. ⑥ Paid-in capital:NT$ 519,786,500 (as of 30 September 2013)
  7. ⑦ Consolidated Sales:NT$ 658,118,000 (2012 financial year)
  8. ⑧ Consolidated Employees:623 (as of 30 September 2013)
  9. ⑨ Exchange of Listing:Gre Tai Securities Market

2. Corporate Overview of the New Subsidiary in Shenzhen, China

  1. ① Company Name:TDI China Inc.
  2. ② Representative Director:Krebbers Andreas Petrus Lambert
  3. ③ Business:Sales and design of small- and medium-sized panels, etc.
  4. ④ Headquarter:Shenzhen Nanshan district, China
  5. ⑤ Date of Incorporation:End of January 2014 (scheduled)
  6. ⑥ Capital:RMB 6 million
  7. ⑦ Fiscal Year End:March 31
  8. ⑧ Stake:100% owned by TDI

3. Effect on the JDI group's performance

The impact from the acquisition of STC and the establishment of TDI's subsidiary in Shenzhen, China is expected to have a minor effect on JDI group's performance.

Reference: JDI press release
"Japan Display Inc. Establishes a New Subsidiary in Taiwan", October 23, 2013

The information contained in this press release is accurate as of the date of issuance and is subject to change without notice. Information in this press release, other than statements of historical fact, constitutes forward-looking statements, which are based on available information, operating plans and projections about future events and trends.
Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from those predicted in such forward-looking statements.

About JDI
Japan Display Inc. is one of the world's leading providers of small- and medium-sized display panels. JDI was formed in March 30 2012 by display manufacturing subsidiaries of Sony, Hitachi and Toshiba. Current shareholding of the company is approximately 70% by Industrial Network Corporation of Japan and approximately 10% each by the former parents of the subsidiaries. The company provides such advanced displays as high-definition, low-power-consumption and thin features for use in smartphones, tablet PCs, automotive devices, digital still cameras, medical equipment and other electronic devices.

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