According to Bloomberg News, Japan Display, a troubled Japanese smartphone display manufacturer, has agreed to inject 75 billion yen (about 637 million US dollars) into the country's government-invested fund "Industry Innovation Agency" (INCJ).
Japan Display is a supplier to Apple Inc. in the United States. The company announced in Tokyo on Wednesday that it will issue 45 billion yen worth of convertible bonds to its first major shareholder, the Industrial Innovation Agency.
In addition, Japan Display will receive a 30 billion yen subordinated loan issued by the “Industrial Innovation Agencyâ€.
Japan Display announced that the news was after the Tokyo stock market closed. However, before this, the Japanese media NHK has reported that the company has locked in the financing. As a result of this news, Japan Display shares rose 2.5% on Wednesday to close at 366 yen.
As global demand for mobile phones stagnate and peers from South Korea and China cut prices to gain more market share, Japan Display is bound to lose money for the third consecutive year. Japan Display said that the newly injected capital will be used for the development of OLED displays.
The development prospects of OLED displays are more extensive, and their applications are more energy efficient and efficient on mobile phones. As Japan Display's largest customer, Apple is considering the use of OLED displays on its mobile phone products as early as 2017.
Amir Anvarzadeh, head of Japanese equity sales at investment firm BGC Partners, said Japan Display funds are depleted and new funding will be used for a range of events, such as OLED R&D and the restart of idle LCD factories. Anvasad believes that there are political considerations for not letting these companies go bankrupt.
Japan Display also announced on Wednesday that it will increase its stake in Japan's OLED display manufacturer JOLED, which will increase its shareholding ratio from 15% to 51%, and this process will be realized through the equity transfer of “Industrial Innovation Agencyâ€. JOLED is developing a new process for the manufacture of OLED displays. It is reported that the OLED display produced by this process does not have such high resolution, but the manufacturing cost is lower.
Japan Display also said in a statement that the company is developing into cars, virtual reality devices, high-end laptops, and healthcare and education to reduce dependence on mobile devices. Japan Display said: "As Korean manufacturers actively promote OLED displays, the current competitive market is increasingly fierce."
The “Industrial Innovation Agency†has been actively reaching out to Japanese companies that are on the verge of bankruptcy. Four years ago, the fund combined the display business of Toshiba, Sony and Hitachi into Japan Display. In addition, the fund also invested in Renesas Electronics, which was formed in 2010 by Mitsubishi Electric, Hitachi and NEC's semiconductor business.
The convertible bonds issued by Japan Display can be converted into stocks from 2019, but the strike price is about 17% higher than the current share price of the company.
Earlier this year, the "Industrial Innovation Agency" lost to Foxconn in Taiwan when bidding for Sharp Corporation (Japan Display's only competitor in Japan).
Considering that OLED displays are standard on future iPhones and other mobile devices, Japan Display and Sharp may need a lot of money to develop this technology. It is currently difficult for Apple to find enough OLED displays to meet the needs of its new iPhone. Earlier reports said that OLED display manufacturers may initially invest up to $2 billion. This is a test for corporate funds, as there may be no orders at the beginning.
Anwarad said: "This is a long-term investment. Sharp and Japan Display both said that they are still far from the mass production. It is impossible in 2017 or 2018. Fortunately, the two companies The OLED display may be available in volume in 2019."
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