Japan Display is a supplier of LCD display panels for Apple’s iPhones and smartwatches. The initial contract between the two was for the supply of LCD displays. Apple later decided to switch to OLED panels. This put Japan Display at a huge disadvantage and the company had to borrow heavily to invest in new machines for the OLED panels. Now, the company is in the process of reducing its debt burden. Coming to its rescue is Ichigo Asset Management. Reports suggest Ichigo can make investments in Japan Display of up to $830 million or 90 billion yen. If this goes through, then Ichigo Asset Management may end up holding more than 50% of the equity. The first tranche will be half of this, $414 million, or 45 billion yen.
Control May Change Hands to Ichigo
As part of this funding deal, Japan Display has accepted to appoint Scott Callon as a co-Chairman in the company. Scott Callon is currently CEO at Ichigo. Once the full investment is made, the company may be controlled by Ichigo.
Japan Display is hoping that it can hold on to its independence as a technology company and protect its copyrights. Apparently Ichigo has assured them of that. The information is that the final round of discussions for the fund infusion will take place early next year and the formalities completed by March 2020.
Japan Display had earlier received $200 million as part of a bailout plan in which Apple and Wistron are supposed to have made the investment. Wistron is Apple’s partner for assembling its phones. Japan Display had not disclosed Apple’s name while making the announcement saying the promise for support came from a customer.
Apple Had Helped with $1.5 Billion for the LCD Plant
It is no secret that Apple is the largest customer for Japan Display picking up almost 60% of its output. The genesis of the financial crisis at Japan Display itself is attributed to Apple. The American technology giant had lent $1.5 billion to the Japanese company to built its manufacturing facility for LCD panels. After changing to OLED, Apple understood the spot Japan Display has been put in and has been accommodative in recovering its investment. There is still an amount of $800 million receivable by Apple from Japan Display.
Japan Display is going to take another couple of years before it can start supplying OLED panels to Apple. Meanwhile, Apple is sourcing these panels from other companies. Apple is trying to help its Japanese supplier by releasing the payments against supplies faster and by participating in the bailout consortiums as well.