Apple may buy factory belonging to struggling Apple display-maker

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Apple may buy factory belonging to struggling Apple display-maker
Japan Display makes LCD screens for Apple.
Photo: Apple

Struggling Apple display-maker Japan Display could sell Apple and Sharp its main smartphone screen factory, a new report claims.

Japan Display still owes Apple more than $800 million for the plant, which it built four years ago for $1.5 billion. It could recoup this money by selling the factory to partners including Cupertino.

Sharp has confirmed that it is considering purchasing the plant, based in Hakusan, Japan. “We are carefully considering it, reviewing the impact that any purchase would have on our earnings, and whether and how much risk it would entail.” Apple has not commented.

Today’s report, from Nikkei, via Reuters, suggests that the sale of the factory might be part of a bailout deal for Japan Display. This bailout comes from sources including Apple, Apple contract manufacturer Wistron, and Japanese asset manager Ichigo Asset Management.

Reuters notes that:

“The cash-strapped company had said this month that financial support of $200 million promised by ‘a customer’, which sources said was Apple, may come in the form of purchasing equipment at the plant.”

Initially, it seems that the deal was for equipment. It has now reportedly expanded to include the sale of the entire facility. This covers both land and buildings.

Apple may buy display factory

At one time, Japan Display was one of Apple’s biggest display manufacturers. But its failure to adopt OLED display technology over LCD caused it to fall behind. Recently the company recorded its 11th quarterly loss in a row. A previous bailout deal collapsed after a Chinese investment firm and several others pulled out.

Japan Display is now starting to create OLED screens for the Apple Watch. This, in turn, will help Apple to diversify its supply chain, which currently depends heavily on LG Display.

Apple has been supportive of Japan Display in other ways. For instance, it has agreed to slow the pace of expected repayments for the Japan Display factory. Apple is additionally paying money it owes Japan Display in shorter increments to boost cash flow.

If Apple does get a piece of the Japan Display factory, that would be a relative rarity for Apple. While it owns its own Mac Pro factory, most of Apple’s manufacturing is done through contract manufacturers.

Today’s report doesn’t make clear whether Apple would assume control of the factory, or just have it as an investment that is independently run by Japan Display.