JOLED Inc., an organic light-emitting diode display company created through a merger of Panasonic Corp.'s and Sony Corp.'s operations, said Monday it has filed for court protection with debt totaling 33.7 billion yen ($260 million).

The company said it will pull out of the display manufacturing business and close its factories in Ishikawa and Chiba prefectures. The struggling venture said of the roughly 380 employees, it will lay off about 280 who are not involved in development.

File photo taken in November 2019 shows a plant of JOLED Inc. in Nomi, Ishikawa Prefecture in central Japan. (Kyodo)

The company suffered from weakened demand for OLEDs and increased competition with its rivals, it said, while adding it took more time and cost than expected to realize stable production.

Japan Display Inc., a former shareholder of the company and a maker of liquid crystal displays, will take over its technological development business, it said.

The move comes despite a vast amount of funding from state-backed fund INCJ Ltd. The fund has long supported JOLED, betting on its potential. The total amount of its financial support amounts to about 140 billion yen.

"It breaks my heart that JOLED had to decide to file for court protection," Mikihide Katsumata, president of INCJ, or Innovation Network Corporation of Japan, said in a statement.

JOLED was set up in 2015 by Panasonic, Sony, INCJ and Japan Display, merging the two Japanese tech giants' OLED operations to compete against Asian rivals.

The idea was to cut into the display market dominated by South Korean and Chinese makers with thinner, energy-saving OLEDs. But it struggled with mass production and could not beat cheaper rival products, leaving the company with no choice but to seek court protection.

INCJ is the top shareholder of JOLED with a 56.8 percent stake, according to Japan Display. Among other major shareholders, car parts manufacturer Denso Corp. owns 16.1 percent of the company.

Sony Corp. renamed itself Sony Group Corp. in 2021 while Panasonic Corp. became a holding company, Panasonic Holdings Corp. in 2022.

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