Apple may be about to invest $1.7 billion in a new factory for Japan Display, primarily dedicated to building smartphone screens for Cupertino.
The proposed plant would be located in Ishikawa, Japan, and is set to start operations in 2016. While it will reportedly also produce panels for other companies, its main purpose (hence the Apple investment) would be to produce iPhone displays.
“No formal decision has been made regarding any matter that we need to disclose,” a spokesperson for the company said in a statement. Last year, Japan Display CEO Shuichi Otsuka said the company was in need of a new plant after reaching maximum capacity at its current facility, located southeast of Tokyo.
Currently Apple uses a number of suppliers to produce its iPhone displays. Many of these companies wind up producing the majority of their displays for Apple. For example, last year it was reported that Japan Display rival Sharp’s Kameyama Plant No. 1 factory was at 90% capacity making displays for the iPhone 6 — leading to concern on the part of the company about its reliance on Apple.
Although there is no doubt that relying too heavily on Apple can be doom for a manufacturer (see GT Advanced for all the evidence you’ll ever need!), it can also be immensely lucrative — and an Apple investment in the necessary equipment can help lower risk. As a case in point, Japan Display’s shares leaped up 14 percent immediately after the news was reported.
Japan Display is far from the first manufacturer to explore building a factory dedicated to all things iPhone. Longtime Apple partner Foxconn has created a $2.6 billion factory dedicated to building displays exclusively for Apple, that will supply OLED panels for future iPhones and Apple Watches.