Beleaguered Apple LCD supplier Japan Display has agreed to a $2.1 billion bailout from a Chinese-Taiwanese group. Although the deal saves the Apple display panel maker, it marks a failure in the Japanese government’s efforts to keep the company from falling into non-Japanese hands.
Japan Display has provided LCD panels for Apple for many years, but faced financial challenges due to Apple’s move to using OLED display technology. The firm has been actively seeking an investment to allow it to enter OLED production.
The group providing the bailout includes Taiwanese display panel producer TPK Holding and Chinese asset management firm Harvest Group. The bailout includes up to 80 billion yen being injected into the company via shares and bonds. Japan Display is expected to sign the deal on Friday.
The group’s bailout money will buy it a 49.8% stake in the company, giving it close to majority control. The Japanese government’s INCJ fund had been the largest shareholder. The investment had been made as part of the attempt to keep the company domestically owned.
INCJ’s investment will go shrink from 25.3% to 12.7% under the deal, as it has agreed a debt-to-equity swap worth 75 billion yen and extending its senior loans with the company worth approximately 77 billion yen.
Japan Display’s trouble in recent years partially stems from an agreement with Apple to build a new LCD panel factory back in 2015. The $1.5 billion project was largely financed by Apple, in exchange for access to the LCD panels over time. However, Apple’s recent shift to OLED panels for their iPhone has led to smaller than expected LCD panel orders.
This week’s bailout is just the latest in a string of attempts to keep the firm afloat, including allegedly raising over $500 million in early 2018 to finance iPhone XR panel orders.
Japan Display is having some success in obtaining OLED Apple orders, as it was earlier this month reported the firm has gotten a piece of the action for OLED screens for the Apple Watch.
