iPhone display-maker Japan Display says it is in line for a financial injection that could bail out the struggling company.
The firm said Monday that it will raise up to 110 billion yen ($990 million) in new financing as early as this week. Japan Display has been suffering as a result of the slowdown in iPhone sales and Apple’s shift to OLED screens.
According to sources speaking to Reuters, Japan Display will raise its cash from an investor group, led by China Silkroad Investment Capital. It will issue stocks and bonds as part of the deal, as well as refinancing its existing debt held by the state-backed INCJ Ltd.
Shares in Japan Display leaped by as much as 16 percent on the news. Last year, the company’s stock fell close to 80 percent.
Japan Display’s ongoing problems
Many Apple suppliers have had a tough time lately as one of their major sources of income ran into problems. Japan Display was already struggling, however, due to not embracing OLED technology when it could have. Instead, it stuck to LCD screens. Apple’s sole LCD iPhone this year, the iPhone XR, has not sold as well as hoped.
As a result of all this, 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.
A report from last month noted that Japan Display still owes Apple money 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 taken a turn for the worse. At present, 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.”
