Supplier of Apple Japan Display, the target of a deal

For Apple, any decline of Japan’s Display would undermine its ability to offer competitive pricing for its new iPhone 11 base model, which is $ 50 cheaper than last year’s XR model.

It may also force the US firm to turn to rival suppliers for liquid crystal displays and increase its confidence in the Samsung Display for diodes that emit organic light.

Japan Display Inc said it intends to strike a deal this month for at least 50 billion yen in vital funds after it had to scramble after an investment group suddenly withdrew from a bailout plan for Apple Inc. the supplier.

Lossing losses for the past five years and with its liabilities now exceeding assets, Japan Display is in dire need of a capital injection.

“We are close to 50 billion and I believe we can cement the deal this month,” new chief executive Minoru Kikuoka told Reuters in an interview.

Japan Display has said that a major customer, who has direct talk sources said Apple intends to invest $ 200m, double the amount previously planned. Hong Kong-based Oasis Management will also contribute $ 150-180 million. A supplier of Japanese Display and other funds also participates.

The revised planned rescue deal is, however, smaller than a previously announced plan for as much as 80 billion yen. Chinese investment firm Harvest Group withdrew from the deal last month, citing changes with other investors on corporate governance.

Kikuoka, who took the lead in September, said LCD screens are attracting renewed market interest, pointing to the rigid demand for affordable low-cost smartphones.

Orders for LCD screens from a large customer have been “stronger than previously planned,” Kikuoka said. The comment follows a recent Nikkei Asian Review report that Apple has asked suppliers to increase production of its iPhone 11 models by about 10%.

Although a late move to OLED screens has cost Apple orders and is responsible for many of Japan Display’s financial problems, the US tech giant still made up about 60% of its revenue in the last financial year ending March.

Kikuoka said the company has begun producing OLED displays. Sources have said that Japan Display will produce OLED displays for Apple Watch this year.

Japan Display is also considering splitting the smartphone panel into a separate company, possibly attracting capital from outside partners, a move that could help reduce the impact of the smartphone market’s volatility on its profits, Kikuoka said./Investing.com

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