Suffering a staggering 14.3 billion in losses! This major Japanese manufacturer is cutting 4,000 jobs worldwide, and a polarizer production line in Taiwan is set to shut down—here’s the company’s response...

Japan’s Sumitomo Chemical previously announced that, hit by poor performance in both its pharmaceuticals and petrochemicals segments, it posted a net loss of 312 billion yen (approximately RMB 14.3 billion) for the last fiscal year—the largest annual loss in its history. As a result, the company plans to cut roughly 4,000 jobs worldwide, with ripple effects throughout its supply chain; reportedly, one production line at its Tainan plant in Taiwan will also be shut down.

According to a report by NHK, Sumitomo Chemical’s losses were driven primarily by two factors: first, the underperformance of sales for drugs—such as those for uterine fibroids—developed by a UK company acquired in 2019, which resulted in an estimated loss of approximately 180 billion yen (about RMB 8.3 billion); second, a downturn in the petrochemical market, leading to a revaluation of fixed assets at its Chiba plant and expected to incur a loss of roughly 25 billion yen (about RMB 1.1 billion).

This quarter’s loss exceeded the previously estimated 245 billion yen (approximately RMB 11.2 billion). According to Keiichi Iwata, President of Sumitomo Chemical, the company is treating the situation with the utmost seriousness and has made a V‑shaped recovery its top management priority. To achieve this goal, it will carry out large-scale global workforce reductions, divest assets or businesses, and review and adjust R&D spending in its pharmaceuticals segment.

The report noted that Sumitomo Chemical is also affecting related supply chains, and that one production line at its plant in Tainan, Taiwan, is expected to suspend operations between this spring and autumn.

According to reports, Sumitomo Chemical plans to cut its production capacity for liquid crystal display materials—specifically polarizing plates—by 30 percent by the end of autumn 2024, primarily due to declining demand from TVs and other applications. However, Chinese manufacturers have been ramping up output one after another, leading to oversupply. According to research firm Omdia, in 2022 Sumitomo Chemical held the second-largest global market share for polarizing plates.

According to reports, Sumitomo Chemical’s subsidiary plants in Tainan, Taiwan, and Pyeongtaek, South Korea, will each shut down one production line between spring and autumn 2024. Meanwhile, a production line at one of its domestic facilities in Japan has already been partially suspended. As a result, the company’s polarizer production capacity is expected to decline by approximately 30% in fiscal year 2024 compared with February 2023.

The report notes that, in addition to polarizing plates, Sumitomo Chemical’s Korean subsidiary, which manufactures color filters (CF) for liquid crystal panels, partially shut down its plant at the end of March, primarily because the rise of Chinese manufacturers has led South Korean customers to scale back their LCD panel production.

Sumitomo Chemical’s decision will undoubtedly have a far-reaching impact on the global chemical industry. However, in the face of its current challenges, the company appears to have few viable options, leaving it with no choice but to recalibrate its strategy, strive to curb losses, and seek a path to recovery in the future.

In response, Sumitomo Chemical’s Taiwan subsidiary, Zhuhua Technology, stated that its operations remain normal and no layoffs have been carried out. As Sumitomo scales back production capacity, this should help stabilize the supply-demand balance for polarizing films.

Sumitomo Technology is the production base of Japan’s Sumitomo Chemical in Taiwan, primarily engaged in the manufacturing and sales of polarizing films, color photoresists, and sputtering targets. It also imports semiconductor photoresists and process chemicals produced by the Sumitomo Chemical Group. Currently, the company employs approximately 1,800 people in Taiwan.

On the 17th, Taiwan’s Southern Science Park Administration, after inquiring with Sumitomo Chemical’s subsidiary in the park, Zhuhua Technology, stated that the matter occurred in March this year. Zhuhua Technology is operating normally, with only a restructuring plan underway; its production lines remain running, and no employees have been laid off.

The Southern Science Park Administration in Taiwan, China, stated that both the recent rumors of layoffs at Zhuhua Technology and the earlier rumors from March this year are inaccurate.