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Apple supplier Japan Display looks to sell LCD factory

Written by Fri 27 Dec 2019

Smartphone manufacturer Japan Display is reportedly in talks with Apple and Sharp for a potential $820M sale

Leading smartphone screen manufacturer and iPhone supplier Japan Display (JDI) is reportedly in talks with Apple and Sharp for the sale of its primary smartphone factory in Hakusan City, western Japan.

The factory may sell for as much as $820 million USD, according to estimates from Nikkei. Japan Display said it was considering all options for the plant, which may include a sale to Apple or Sharp, or a bailout from an asset management company.

JDI also stated that it is currently running a comprehensive equipment and infrastructure assessment at the facility, in advance of a decision on the Hakusan plant’s future.

Apple originally financed the plant, providing $1.5 billion when it was constructed four years ago. Since then, Japan Display has manufactured LCD smartphone screens for the company; but Apple’s shift to OLED screens appears to have significantly impacted company revenues. 60 percent of Japan Display’s income is still generated by Apple, but the move away from LCD has resulted in financial problems for the company. Currently, $800 million of the plant construction financing is still outstanding.

Sharp, a subsidiary of smartphone screen manufacturer Foxconn, stated that they are also considering purchasing the plant. In a statement, the company said, “We are carefully considering it, reviewing the impact that any purchase would have on our earnings, and whether and how much risk it would entail.”

Earlier this month, Japan Display agreed to a bailout from Ichigo Asset Management, after a similar financing deal fell through in September 2019. If this transaction is completed, it would give Ichigo control of the company.

JDI was created as a joint venture that combined the LCD divisions Toshiba, Sony and Hitachi. The company went public in 2014, but has suffered losses due to changes in market demand as well as potential mismanagement and possible fraud.

An accounting executive was fired last year, suspected of embezzling more than $5 million from 2014-2018. The former employee then accused Japan Display of accounting fraud, claiming that the company overvalued LCD screen inventory by as much as $91 million over the course of several years.

The former executive that levelled the charges at Japan Display died in an apparent suicide in early December. Following an internal inquiry, Japan Display announced that it would engage an independent third-party to investigate the company’s financial records.

Written by Fri 27 Dec 2019


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