TOKYO: A top maker of displays for Apple Inc. smartphones has asked a Japanese government-backed fund for hundreds of millions of dollars in aid, the latest sign of stress among Apple suppliers. Japan Display Inc. said Tuesday it lost about $115 million in the April-June quarter and turned to its top shareholder, the government-backed Innovation Network Corp. of Japan, for support.
Sluggish demand from Apple and the strong yen have battered Japan Display and Sharp Corp., another Japanese display maker, which has agreed to be taken over by Taiwan’s Foxconn Technology Group. “Our largest shareholder, INCJ, told us that they will continue to provide full-fledged support,” said Japan Display’s chief executive, Mitsuru Homma. “My hope is the support would come in a way that doesn’t affect other existing shareholders,” Mr. Homma said, indicating he doesn’t want to issue new shares to the fund, which already owns 35.6% of Japan Display.
Another Japan Display official said the company expected to get tens of billions of yen, or hundreds of millions of dollars, in loans and loan guarantees from the fund. An INCJ spokesman said that nothing specific has been decided, but that the fund has expressed its support for Japan Display. Japanese companies in the electronic-devices area have leaned heavily on Apple for business in the past few years, prospering when the iPhone was on the upswing and taking a hit when sales slackened.
What amounts to a nagging cold for Apple, which still earned $7.8 billion in the most recent quarter, can quickly turn life-threatening for its suppliers. Japan Display’s revenue in the most recent quarter was down 29% compared with the year-earlier period. Analysts say there might not be room left for Japan Display in an industry with tough competitors from China and South Korea. “If the government believes this industry is still important for Japan, the fund or the Ministry of Economy, Trade and Industry would need to take aggressive turnaround measures,” said SMBC Nikko Securities analyst Ryosuke Katsura.
