A major decision made by Apple has brought its provider of Japan Display LCD displays from the attic to the outdoor pavilion. In 2014-2015, when Apple's iPhone 6 and 6 Plus brought a new design and larger LCD screens to iPhone users, Japan Display began building a new factory in the center of the country. According to Reuters, citing sources inside Japan Display, Apple has granted $ 1.5 billion to the company for the construction of the new plant, which should be repaid with some of the money that Japan Display would receive from the sale of its panels.
It turned out that Apple's decision to switch to the OLED screens for the iPhone X from 2017 as well as for the iPhone XS and the iPhone XS Max of the iPhone. last year let the new facility run at only 50% capacity. And although the iPhone XR, more affordable, features a 6.1-inch LCD, appliance sales have not been as high as expected. With the best battery life that can be found on any iPhone, a powerful Aion Bionic chipset under the hood and a single-lens camera at the back that produces exceptional shots, the iPhone XR should have been a huge success. However, a number of factors beyond the control of Apple have dampened sales of this device, adversely affecting Japan Display.
For example, the strength of the US dollar versus the Chinese yuan meant that, to keep its margins in China, Apple had to initially price the iPhone XR above the price of high-quality phones, such as Huawei Mate 20 Pro. In addition, the trade war between the United States and China continues to hurt the country's economy. Finally, the rise of nationalism in China following the US attacks on Huawei and the arrest of the company's CFO in Canada led to an unofficial boycott of Apple products in China.
And now, the future of Japan Display seems darker than ever. The company still owes money to Apple for the $ 1.5 billion the US technology giant has made available to its supplier to help its supplier build the new plant. One of the company's internal sources says the decision to build the new plant was the right one at the time. "In retrospect, the new plant was not needed, but the decision was not wrong at the time." Japan Display began to pick up speed with Apple at the time, and Apple wanted the new factory. "
Japan Display hopes to get a cash injection from a Chinese investment company
What has also hurt Japan Display is that it has made its decision too late to integrate with OLED panels. And his breadmaking product is facing stiff competition. For example, in 2015, Japan Display was responsible for the LCD screens of 33% of Huawei handsets. Now this figure has dropped to 4% thanks to improved panels provided by Chinese competitors such as BOE Technology and Tianma Microelectronics.
Missing money, Japan Display is trying to reach an agreement with Silkroad Investment Capital, according to two anonymous sources who spoke to Reuters. In return for a near-majority stake in Japan Display, Silkwood would invest between $ 500 and $ 700 million in the company. The investment group would then build an OLED panel production plant in China using the technology of Japan Display.
Japan Display was not the only one among Apple's supply chain companies to have made big profits because of the vigorous sales of the iPhone 6. A person working at an Apple supplier said: "We were all delighted to see the lifetime sales of a single model of iPhone reach 100 million units. Providing components for a single model in large quantities is extremely cost effective", he said. "At the same time, we exposed ourselves to enormous volatility risks."
According to rumors, Apple would use OLED panels on the next three iPhones 2019, which should display the same screen size as the current models. According to the latest news from Apple analyst Ming Chi-Kuo, the iPhone XI and the iPhone XI Max will carry OLED panels and the iPhone XR (2019) will have an LCD screen.
