Japan Display Inc. is considering selling a major plant in central Japan to Apple Inc. and Sharp Corp. in an apparent bid to improve its balance sheet, sources close to the matter said Friday.
The struggling display-maker, also known as JDI, closed the plant in Hakusan, Ishikawa Prefecture, in July due to weak demand for smartphone panels from Apple.
As part of efforts to turn its business around, Japan Display was in talks with the U.S. technology giant to sell part of the plant’s facilities for $200 million.
But the company now appears to be set on selling the whole factory to Apple and Sharp for around ¥80 billion to ¥90 billion ($731 million to $822 million), the sources said, adding that both sides are trying to reach a deal by the end of March.
By reducing fixed costs through the sale of the Hakusan Plant, JDI apparently aims to improve its cash-flow situation.
“JDI is considering all of the options regarding handling of the Hakusan Plant but nothing has been decided,” the company said in a statement Friday.
To examine those options, it also said, “JDI is currently running a comprehensive check on the production equipment and infrastructure facilities at the Hakusan Plant.”
Sharp, also in a statement released Friday, said the firm was carefully examining how the possible acquisition of the Hakusan Plant would contribute to its earnings and whether the deal would pose any risk to its business operations.
The plant used to be one of Japan Display’s main factories for producing crystal display panels for Apple’s iPhones following the factory’s launch at the end of 2016.
Apple provided a loan that covered most of its construction costs, totaling ¥170 billion, but the repayments to Apple have weighed on its financial situation.
JDI said in mid-September it had started talks with Chinese Harvest Tech Investment Management Co. regarding a plan to produce next-generation OLED panels for smartphones at the plant.
But at the end of September the Chinese fund withdrew from a bailout plan to provide a capital injection of up to ¥80 billion.
JDI said in mid-December it had basically agreed to receive a capital injection of up to ¥90 billion from Ichigo Asset Management Ltd. as a new sponsor. JDI is expected to receive the financial support from the asset management firm in February or March after the negotiations are finalized.
The display-maker was established in 2012 through the merger of the operations of Sony Corp., Hitachi Ltd. and Toshiba Corp. with support from the state-backed fund INCJ Ltd.