NON-APPLE BUSINESSES
Japan Display was formed in 2012 in a government-backed merger of the ailing display units of Sony Corp, Toshiba Corp and Hitachi Ltd.
It boasts strength in so-called thin-film transistor technology (TFT), crucial for making high-resolution images on both LCD and OLED panels. In addition to its Apple business, which accounted for more than half the company's revenue over the last four years, it's a top supplier of dashboard panels for major automotive component companies such as Continental .
But Japan Display has struggled to navigate the fast-changing display business.
Its new LCD factory was still under construction when Apple informed Japan Display in autumn 2015 that it planned to move quickly away from LCD to the newer OLED technology, two former company officials said. It was too costly by then to abandon the half-completed plant, one of them said.
Japan Display's management at the time, led by former Sanyo Electric executive Mitsuru Homma, promised to start mass-production of OLED panels by 2018.
In the meantime, the management shut down older, unprofitable LCD lines to shift resources to OLED, but its main investor, a state-backed fund, blocked plans for drastic job cuts for fear of public backlash, one of the former officials said.
Unexpectedly weak sales of the iPhone 6s created a cash crunch in 2016, and Homma resigned early the next year after the company took a $640 million bailout from the state-backed fund.
The new chief executive, Nobuhiro Higashiiriki, declared a full-on shift to OLED. But the company was already behind rivals, notably Samsung Electronics, and still needed more cash for OLED investment. Disappointing sales of the iPhone XR, the only LCD model in Apple's 2018 lineup, were yet another blow.
"The company now looks exhausted, with many engineers leaving," one former employee said.
Some board members have expressed concerns about technology transfer that may follow the proposed Chinese investment, sources familiar with the talks said. But the government investment fund has run out of patience.
"We don't have any other option," one of the company sources said, adding that the government has been quiet about the bailout plan. "They could argue that display technologies are not something Japan must keep and protect, when Chinese panel makers are ramping up more display plants."
($1 = 111.0200 yen)
