One of Apple’s biggest display makers on the verge of cracking

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iPhone 7 front
iPhone 7 display maker is in trouble.
Photo: Ste Smith/Cult of Mac

Japan Display, one of Apple’s main component makers for iPhone displays, is struggling and could lose the financial support of the Japanese government if it’s not able to drum up more non-Apple biz.

The company has been hit by a triple threat: a rise in the Japanese yen, a reluctance to shift from its LCD technology while rival companies ramped up OLED facilities, and slowing iPhone sales.

“Right now, where it’s effectively an Apple contractor and their performance automatically gets worse when Apple’s performance gets worse — that kind of situation just doesn’t work,” said Hiroshige Seko, a confidant of Japanese Prime Minister Shinzo Abe, in a new interview about Japan Display.

The company was formed by a government-backed fund in 2012, combining display operations belonging to Sony, Hitachi and Toshiba. The government-backed INCJ remains Japan Display’s top shareholder, with a 35.6 share of the company. It would be disastrous for Japan Display if INCJ dropped out.

Japan Display has said it’s working on new technologies that will help the Japanese economy grow, while distancing itself from the volatile smartphone market.

The company’s quarterly net loss rose to 11.8 billion yen ($115 million) in the quarter ending this past June. Earnings from the next quarter are set to be released sometime after the end of Q3 at the close of this month.

Despite the way this news is being reported, Apple is currently doing far better on the smartphone sales front than comments like Hiroshige Seko’s imply. Demand has been phenomenal for the iPhone 7 to the point where Apple has been struggling to keep up with demand.

In other words, it sounds less like this is something that can be blamed on Apple, and more like Japan Display is paying the cost for putting all its eggs in the iPhone basket. Which is exactly what fellow manufacturers like Foxconn have warned about in the past.

Source: Bloomberg