Japan Display could sell Apple and Sharp its main smartphone screen factory

Apple supplier Japan Display is on the hook for more than $800 million it owes to Apple for building a smartphone display manufacturing plant four years ago, and now it could sell the entire factory to the Cupertino firm and Sharp, another Apple supplier that builds LCD panels for some iOS devices.

Japan Display has been bleeding money for the past five years due to sluggish display sales and restructuring costs. It’s only now that it’s starting to build OLED screens for Apple Watch, for example. The company has ignored the superior OLED display technology for far too long so little wonder its LCD business has been shrinking in the past few years.

Making matters worse, the factory cost about $1.5 billion to build but the company still owes Apple more than $800 million for the facility, which is located in Hakusan, Japan.

From today’s Reuters report, citing a Nikkei business daily story:

The cash-strapped company had said this month that financial support of $200 million promised by ‘a customer’, which sources said was Apple, may come in the form of purchasing equipment at the plant. Those discussions appear to have switched to the sale of the entire factory, the Nikkei said.

Sharp has confirmed receiving a client request to join the transaction, saying in a statement it is carefully considering the offer and “reviewing the impact that any purchase would have on our earnings, and whether and how much risk it would entail.”

Taiwanese contract electronics manufacturer Wistron, another supplier that assembles some Apple products and accessories, is reportedly also set to take part in the bailout.