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Japan Display may sell smartphone screen factory to Apple

It is not news to anyone that Japan Display (JDI) goes bad in the legs. The smartphone screen maker, which has Apple as one of its biggest customers, filed a (failed) financial recovery request earlier this year, and only survived because of a multimillion dollar investment made by Apple. Things, however, are still going badly – and now, the Japanese may be considering selling part of its operations precisely to Apple.

According to Nikkei, JDI would be holding talks with Apple and Sharp to sell one of its main factories in the city of Hakusan (Japan) for about $ 820 million. Sharp confirmed the offer, saying it is considering the possibility; Apple, on the other hand, did not comment on the case.

If the sale is successful, JDI plans to use the money as part of the company’s operations rescue plan. The manufacturer still owes more than $ 800 million to Apple, as the Cupertino giant paid for most of the construction of a Japanese factory in 2015. Originally, the deal was for Apple to be paid for by selling JDI LCD panels , but it got more complicated due to the reduced demand for this type of part.

JDI is now directing efforts to produce its first panels OLED. Rumors claim that the Japanese will start producing screens of the type for Apple Watch, but according to sources, the components will only start to be manufactured at an appropriate pace two years from now – obviously, a very long term for a company on the edge of the abyss.

Even if it doesn’t buy the factory, Apple has every interest in keeping JDI alive – after all, Apple’s business practice is to diversify its suppliers of all types of components as much as possible, and the death of one of its main partners in the business of the panels would not be good news. If JDI can escape that bar, however, we will have to wait and see.

Broadcom

Japan Display’s screen factory may not be Apple’s only acquisition in the near future, however. According to the Wall Street Journal, Apple would also be considering the purchase of the radio frequency chips gives Broadcom – important components in the composition of any smartphone, responsible for filtering unwanted radio frequencies and clarifying signals.

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According to the report, the division generated $ 2.2 billion in revenue for Broadcom in the last fiscal year; in conversations with the Credit Suisse Group, the company would have estimated that it could profit $ 10 billion with the sale. Although Apple was not cited as one of the potential buyers (no company was), experts say that Apple would be the most “natural” buyer in the operation – it is, after all, Broadcom’s largest customer in the area, contributing about 25% of the company’s general revenue in 2018.

Unlike JDI, Broadcom is not experiencing financial difficulties: the sale of the radio frequency chip division would be part of a corporate reorganization of the company. In a recent conference with directors and investors, CEO Hock Tan said the transaction had no ties to the company’s other divisions, making its sale little detrimental – and highly profitable – to Broadcom.

Apple, as usual, did not comment on the case – but we, as usual, will stay tuned.

via AppleInsider, Cult of Mac