Struggling display maker Japan Display reportedly still owes Apple a whole lot of cash for one of its factories.
Apple paid a large chunk of the $1.5 billion in costs to build an LCD factory in 2015. In return, Japan Display would pay Apple a percentage of screen sales. Unfortunately, things have gone south since then — and Japan Display’s factory is running at only half capacity. Due to the way the deal is structured, the company reportedly owes Apple “a majority of the construction cost.”
“In retrospect, the new plant was unnecessary,” a source told Reuters. “But the decision wasn’t wrong back then. Japan Display started to pick up steam thanks to Apple at the time, and Apple wanted the new plant.”
Jaan Display isn’t the only Apple supplier to have taken a hit as sales have flattened and then begun to decline. However, in Japan Display’s case it seems this is compounded by Apple’s switch to OLED displays. This has led to the LCD factory not being the massive money spinner that was hoped for. That’s particularly true as a result of allegedly weak sales for the LCD iPhone XR.
As a result, Japan Display has had to ask for bailouts to help it survive. It has also shifted its strategy to focus on other non-display areas like sleep tracking sensors. Currently it is trying to catch up on OLED displays, but lags behind competitors. Last year, Japan Display’s stock fell close to 80 percent.