Media reported that Japan Display had contacted Apple and Sharp to sell its main smartphone screen factory in an effort to pay off its huge debts. Four years ago, Japan Display built the plant at a cost of $1.5 billion, but now it’s only $820 million. “We are carefully considering the acquisition to examine the possible impact on revenue and the risks involved,” Foxconn’s Sharp said in a statement.
(Photo from Japan Display, via Apple Insider)
Earlier, Japan Display had been in talks with Ichigo Asset Management to secure financial support. It represents a 50 yen per share purchase of common stock and provides Japan Display with 54 billion yen ($414 million).
Meanwhile, Japan Display is looking for more would-be buyers for its plant in Ishikawa Prefecture, Japan, such as Apple. However, Reuters reported that Apple had not responded to media requests for comment.
In fact, a large part of the financial difficulties that put Japan Display in trouble was a deal with Apple. The company borrowed about $1.5 billion four years ago to build an LCD display plant, but the money needs to be repaid in stages.
Unexpectedly, Apple’s subsequent switch to OLED screens resulted in a significant reduction in orders from Japan Display, making it difficult to repay the remaining $800 million in debt.
Of course, Apple is also involved in the appropriate rescue of the Japan Display to keep the company running, for example by offering shorter accounting periods. As a major customer of Japan Display, Apple accounts for about 60% of its revenue.
Finally, while Japan Display is slowly producing OLED panels that could be used on the Apple Watch, Apple may have to wait up to two years.