Japan Display to sell LCD factory to Sharp and use the cash to pay back Apple

Japan Display to sell LCD factory to Sharp and use the cash to pay back Apple
Back in 2014-2015, Japan Display (JDI) was considered to be Apple's major smartphone display supplier. At that time, the iPhone 6 and the iPhone 6 Plus were bringing larger-sized LCD screens to iPhone users. The original 3.5-inch display found on the first iPhone models rose to 4-inches with the iPhone 5 and to 4.7-inches on the iPhone 6. The iPhone 6 Plus carries a screen size of 5.5-inches and those sizes remained the same until 2017's iPhone X weighed in with a 5.8-inch OLED screen.

Japan Display to sell factory to Foxconn's Sharp

The iPhone X was the beginning of the end of Japan Display's importance to the iPhone since the supplier was late to embrace OLED. JDI borrowed $1.5 billion from
Apple to build a new LCD plant. With smartphone manufacturers-including Apple-turning away from LCD, JDI's new factory was running at only 50% of capacity. According to the Nikkei Asian Review, on Friday Japan Display announced that it will sell a smartphone display factory and the land it sits on to Sharp for 41.2 billion yen (the equivalent of $386 million). The Hakusan LCD factory along with equipment that will be sold to a customer believed to be Apple, will bring Japan Display $668 million while at the same time cutting excess capacity that has negatively impacted its earnings. This specific factory has been idle since 2019.

The facility was supposed to have been sold by the end of this past March but the global pandemic caused the plans to change. When the factory was built, Apple covered most of the 170 billion yen cost ($1.61 billion USD) of the facility. Production started in late 2016 with up to seven million smartphone panels manufactured each month. As time went on, the number of panels churned out by the factory declined on a monthly basis. Japan Display will use the funds it receives from the sale of the plant to pay back Apple for the prepayment it made toward the facility.

Sharp, which is owned by iPhone assembler Foxconn, will rent the necessary equipment from Apple that will allow it to produce LCD displays for older iPhone models. Sharp also expects to use the facility for developing and producing the next generation of displays including microLED screens which use millions of tiny light-emitting-diodes to produce a sharp display (no pun intended). Sharp does plan to spin-off its LCD panel business in October.

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Japan Display has lost money in 11 consecutive quarters and the company does produce the AMOLED displays that grace the Apple Watch.

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