Apple Looks Willing to Help Struggling iPhone-Display Maker - The Wall Street Journal

Negotiations over a Japan Display rescue have repeatedly stumbled because of prospective investors’ concern over the company’s business outlook. Photo: toru hanai/Reuters

By

Takashi Mochizuki and

Takashi Mochizuki
The Wall Street Journal
• Biography
• @mochi_wsj
• takashi.mochizuki@wsj.com

Kosaku Narioka

Kosaku Narioka
The Wall Street Journal
• Biography
• @kosakunarioka
• kosaku.narioka@wsj.com

June 18, 2019 5:55 a.m. ET

TOKYO— Apple Inc. AAPL 0.60% has shown willingness to help a Japan-based display maker that is struggling because of sluggish iPhone sales, said people involved in the discussions, who called it an unusual show of consideration toward a supplier.

Japan Display Inc., 6740 3.77% which makes liquid-crystal display panels for the iPhone XR, is running out of cash owing to weaker-than-expected sales of the handset, and an investor group’s bailout package of more than $700 million was thrown into limbo this week.

Negotiations over a Japan Display rescue have repeatedly stumbled because of prospective investors’ concern over the company’s business outlook. The global smartphone market has become saturated, and troubles at China’s Huawei Technologies Co., another major smartphone maker, have made it less likely that Japan Display can find an alternative to its core business of supplying Apple.

Taiwan-based touch panel maker TPK Holding Co. 3673 -1.00% was originally a key part of the bailout plan, according to a Japan Display announcement in April, but TPK said Monday that it was dropping out. China-based Harvest Fund Management Co. remains part of the investor group, and Japan Display said Hong Kong-based Oasis Management Co. has joined.

With financing from Apple, Japan Display spent ¥170 billion, or nearly $1.6 billion, to build a factory in Japan three years ago to make iPhone panels, according to a Japan Display spokesman. Japan Display agreed to pay back at least ¥20 billion a year, and the outstanding amount as of March was ¥100 billion, the spokesman said.

While Apple has agreed to loosen the repayment terms, prospective investors in Japan Display are asking for further concessions, including waiving some of the debt outright, injecting new cash of up to ¥20 billion and guaranteeing orders to Japan Display for this year and next year, said people involved in the talks.

Apple has signaled it could consider the requests, they said. Apple declined to comment.

“We are not sure yet if we would really need to tap Apple to chip in, and the amount could be lower than ¥20 billion, but they are at least showing willingness,” said one person involved in the talks. “You’d be surprised to see how supportive Apple is to us.”

About half of Japan Display’s revenue comes from Apple, according to Japan Display’s financial reports.

Apple has been involved in several run-ins with suppliers who blamed business troubles on strategy changes at the Cupertino, Calif., company. Apple says that it is proud of the strong relationships it has built with suppliers and that suppliers must be agile in responding to changing conditions.

When Toshiba Corp. needed to raise funds in 2017 by selling a majority of its flash-memory unit, Apple—a Toshiba customer—helped the deal go through by purchasing preferred shares in the unit. The deal closed last year.

Prospective investors in Japan Display are worried that Apple may drop liquid-crystal display models from its iPhone lineup in 2020 and switch entirely to organic light-emitting diode panels, a newer technology already used in some iPhones. That is why those investors want Apple to guarantee purchases from Japan Display through next year, said the people involved in the talks.

Japan Display hasn’t been able to mass produce OLED panels for smartphones, although it is set to provide smaller OLED screens for the Apple Watch this year, say people involved in the plans.

—Tripp Mickle contributed to this article.

Write to Takashi Mochizuki at takashi.mochizuki@wsj.com and Kosaku Narioka at kosaku.narioka@wsj.com

Let's block ads! (Why?)

https://www.wsj.com/articles/apple-looks-willing-to-help-struggling-iphone-display-maker-11560851731

2019-06-18 09:55:00Z
CAIiEEQKxF0yxlWQs-TtqVol5vAqGAgEKg8IACoHCAow1tzJATDnyxUw-aS0AQ

Bagikan Berita Ini