Apple display maker Japan Display continues to suffer setbacks, with the latest being a fall in its share price after it was revealed that the company is seeking financial support from a Japanese government-backed fund.
Japan Display has been hit by the triple whammy of iPhone sales falling, a damaging rise in the Japanese yen currency, and seemingly betting on the wrong horse by hanging onto LCD technology for too long while rival companies were ramping up their OLED facilities for next year’s big iPhone refresh.
“We encountered a temporary funding shortage,” Mitsuru Homma, Japan Display’s chief executive, said in an earnings release this week — referring to a damaging cashflow issue in May, which coincided with payments for buying new equipment.
Japan Display’s quarterly net loss widened to ¥11.8 billion ($115 million) in the quarter ending in June. This is up considerably (though not in the good way) from the ¥461m loss it endured this time one year ago. Estimates suggest that Japan Display could need to borrow an extra ¥50 billion to make it through the 2017-2018 financial year.
Shares in the company fell 5.2 percent on Wednesday morning, and had already dropped 6.5 percent since Friday when Japan Display first issued a profit warning.
While Apple made out surprisingly well in its most recent quarterly earnings (partly due to other non-iPhone sale businesses performing better than expected), this is another example of why it’s bad for suppliers to put all their eggs in the iPhone basket.
And how quickly things can change for a company that, just one year ago, was building a $1.4 billion plant dedicated to building Apple displays — with dreams of becoming Cupertino’s primary display maker.
Source: FT
