Japan Display reportedly selling Apple-funded LCD factory to Sharp

Japan Display is reportedly finalizing a plan to sell its primary LCD production facility to Sharp in an attempt to ease its debts to Apple.

The struggling Apple partner was first said to be considering a sale of the plant in 2019 in an effort to pay back its debts to Apple, which funded the construction of the facility with a $1.5 billion "prepayment" to the display maker.

Now, Nikkei reports that Japan Display plans to finalize the deal to sell the factory and the land it occupies to Sharp, a subsidiary of Apple supplier Foxconn. The sale is estimated to be worth about 40 billion yen (about $375 million).

The Hakusan plant, located in the Ishikawa Prefecture of Japan, is equipped to produce LCD smartphone displays. It has been left idle since July 2019, a casualty of Japan Display's reported lack of preparation for the iPhone's shift to OLED.

In March, Japan Display was said to have sold about $200 million worth of LCD manufacturing equipment from the facility to a customer believed to be Apple. Nikkei's report on Thursday suggests that Japan Display has sold a total of $281 million worth of equipment to that customer.

Sharp, for its part, plans to use the facility to consolidate its production of LCD panels for Apple iPhone while renting the manufacturing equipment from Apple. A Sharp facility in Kameyama, Japan, will reportedly shift to producing panels for customers in areas such as automotive or medical equipment. The facility can produce up to 7 million display panels per month.

Japan Display originally planned to sell the plant, that Apple assisted build by pre-funding it for 170 billion yen, by the end of March, but the global coronavirus pandemic snarled negotiations.

In total, the sale of the factory to Sharp and equipment to the unnamed customer could net Japan Display about 70 billion yen. As of March 2020, Japan Display was said to still owe about $800 million to Apple.

7 Comments

CloudTalkin 916 comments · 5 Years

About 4 years ago

Ugh. This horse should have been put down a long time ago. All four legs were essentially broken when they accepted money to build a factory for a company that already knew it was moving on to a different technology. Keeping it alive was nothing more than cruelty. They were never going to be able to pay Apple back.

viclauyyc 847 comments · 10 Years

Can AI use just one currency in an article? Do you expect every reader to do their calculation?

melgross 33607 comments · 20 Years

CloudTalkin said:

Ugh. This horse should have been put down a long time ago. All four legs were essentially broken when they accepted money to build a factory for a company that already knew it was moving on to a different technology. Keeping it alive was nothing more than cruelty. They were never going to be able to pay Apple back.

The news here isn’t entirely accurate. The plant produced panels for at least some iPads too. But JD was supposed to be moving to OLED for Apple’s phones as well. Apple still sells a lot of LCD phones, and while that will continue to taper off as the older ones go out of production, they should have been able to operate the plant profitably for the time needed. Buy JD had some serious quality control and production issues. That kept the plant from producing competitively. That where most of the problems came from. by the time most of the issues had been resolved, times had rolled by.

melgross said:

CloudTalkin said:

Ugh. This horse should have been put down a long time ago. All four legs were essentially broken when they accepted money to build a factory for a company that already knew it was moving on to a different technology. Keeping it alive was nothing more than cruelty. They were never going to be able to pay Apple back.

The news here isn’t entirely accurate. The plant produced panels for at least some iPads too. But JD was supposed to be moving to OLED for Apple’s phones as well. Apple still sells a lot of LCD phones, and while that will continue to taper off as the older ones go out of production, they should have been able to operate the plant profitably for the time needed. Buy JD had some serious quality control and production issues. That kept the plant from producing competitively. That where most of the problems came from. by the time most of the issues had been resolved, times had rolled by.

They got the loan to build the LCD plant in 2015. The plant was to come online in 2016. I firmly believe Apple already knew it was switching to OLED since it was happy with the progress of OLED tech they'd been using since 2014 in the Apple Watch. Apple is not a company to make impulsive decisions. The OLED move was years in the making imo. JD was a dead man walking even before they agreed to the loan. By 2017 when they decided to panic-transition to OLED production it was too late. They weren't getting any phone orders. Heck, it's 2020 and LG is barely getting phone orders. The most JD could hope for was some Apple Watch OLED orders, and that hope only existed if they could get investors to keep throwing good money after bad. Remarkably, even up until last year they had somehow convinced investors they could be saved. How, I have no idea. When the Harvest Group came to their senses, it really started to crumble.

Quality issues (as you noted) and bad strategic decisions had already doomed JD. When they agreed to that 2015 loan to build the LCD plant, they were signing their own death warrant.

CloudTalkin said:

melgross said:

CloudTalkin said:

Ugh. This horse should have been put down a long time ago. All four legs were essentially broken when they accepted money to build a factory for a company that already knew it was moving on to a different technology. Keeping it alive was nothing more than cruelty. They were never going to be able to pay Apple back.

The news here isn’t entirely accurate. The plant produced panels for at least some iPads too. But JD was supposed to be moving to OLED for Apple’s phones as well. Apple still sells a lot of LCD phones, and while that will continue to taper off as the older ones go out of production, they should have been able to operate the plant profitably for the time needed. Buy JD had some serious quality control and production issues. That kept the plant from producing competitively. That where most of the problems came from. by the time most of the issues had been resolved, times had rolled by.

They got the loan to build the LCD plant in 2015. The plant was to come online in 2016. I firmly believe Apple already knew it was switching to OLED since it was happy with the progress of OLED tech they'd been using since 2014 in the Apple Watch. Apple is not a company to make impulsive decisions. The OLED move was years in the making imo. JD was a dead man walking even before they agreed to the loan. By 2017 when they decided to panic-transition to OLED production it was too late. They weren't getting any phone orders. Heck, it's 2020 and LG is barely getting phone orders. The most JD could hope for was some Apple Watch OLED orders, and that hope only existed if they could get investors to keep throwing good money after bad. Remarkably, even up until last year they had somehow convinced investors they could be saved. How, I have no idea. When the Harvest Group came to their senses, it really started to crumble.

Quality issues (as you noted) and bad strategic decisions had already doomed JD. When they agreed to that 2015 loan to build the LCD plant, they were signing their own death warrant.

Just think about it for a minute. Why would Apple plunk $1.5 billion down on something they already knew they wouldn’t need? They wouldn’t. The story is obviously not quite as you say it. Something else was going on behind the scene..