Apple will now be largest player in Japan Display bailout, says new report

A new month, a new chapter in the ongoing Japan Display bailout story…

It was last month reported that the rescue plan was once again in doubt after the lead company pulled out of the consortium. However, a new report today suggests things may be back on track, thanks to Apple…

Background

The story begins back in 2016. Japan Display found its LCD orders falling dramatically as smartphone manufacturers began the shift to OLED. The company didn’t have the capital needed to build OLED production lines, which are expensive to create, so needed a $636 million government bailout to keep the company afloat and let it finally invest in OLED.

Apple took a leisurely journey toward OLED screens, starting with the Apple Watch in 2015, followed by the Touch Bar on the MacBook Pro the following year, and then its first OLED iPhone, the iPhone X in 2017.

The iPhone maker was keen to diversify its OLED supply chain away from Samsung as its sole supplier, but the market was growing increasingly competitive, with Sharp, LG, and BOE all hoping to win Apple business. Japan Display, in the meantime, was still struggling to raise the capital needed for large-scale OLED screen production.

A second bailout was announced, initially for $723 million, though with a wide variety of numbers subsequently bandied about. Things looked good for a while as that plan was “confirmed,” and the company won orders for Apple Watch screens. Apple agreed to assist the company by waiting for repayment of a $1.5 billion loan made to the company years earlier to fund LCD production.

However, things started unravelling when a major backer exited the rescue plan. Apple agreed to chip in $100 million to help balance the books, but OLED iPhone displays still looked to be at least two years away.

A second backer then withdrew last month — this time, the one leading the consortium.

Apple set to lead Japan Display bailout

A Reuters report today suggests that Apple will be doubling its planned contribution to the rescue.

Japan Display Inc said it aims to clinch a deal this month for least 50 billion yen ($470 million) in vital funding, having had to scramble after an investment group suddenly pulled out of a bailout plan for the Apple supplier […]

Japan Display has said a major client, which sources with direct knowledge of the talks have said is Apple, intends to invest $200 million, double the amount it previously planned. Hong Kong-based Oasis Management will also contribute $150-180 million. A Japan Display supplier and other funds are also set take part.

“We are close to 50 billion and I believe we can cement the deal this month,” new chief executive Minoru Kikuoka told Reuters in an interview.

That would make Apple the single biggest contributor to the fund.

Japan Display is a key supplier for Apple as it makes many of the LCD screens for the base model iPhone 11. Longer-term, Apple wants to bring the Japanese company on board as a maker of OLED iPhone screens, reducing its dependance on Samsung — though that may be some time away. In the meantime, Japan Display has already won orders for OLED screens for the Apple Watch.