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Japan Display having trouble landing backer for turnaround

Chinese players seen losing interest as Beijing shifts focus from LCDs to chips

Disappointing sales of the iPhone X are prompting Apple to increase orders for LCD panels.

TOKYO -- Cash-strapped LCD manufacturer Japan Display's talks with prospective investors have run aground as initially eager Chinese companies appear to have gotten cold feet.

The company, known as JDI, wanted to ink a deal by the end of March. But that will not happen until April or later, it has told its top shareholder, the public-private investment fund Innovation Network Corp. of Japan, and main lenders.

JDI's turnaround plan released last summer is centered on a "partnership with a global corporation" premised on a capital infusion. An agreement was to be signed by the end of this fiscal year under the timeline.

The company is in talks with Chinese manufacturers BOE Technology Group, Shenzhen China Star Optoelectronics Technology and Visionox, as well as Hon Hai Precision Industry , the Taiwanese iPhone assembler known as Foxconn Technology Group, which has acquired electronics juggernaut Sharp. JDI, which was formed through the 2012 merger of the display businesses of Hitachi, Sony and Toshiba, is also talking to some of its customers that make smartphones, as well as parts suppliers.

JDI, the leader in making liquid crystal display screens for smartphones, is searching for a partner that will provide capital injection to beef up its finances. It also wants the collaborator to jointly finance the hundreds of billions of yen in investment into mass production of OLED panels, the cutting-edge technology that smartphone makers are increasingly embracing. But potential backers are wary of making such a massive investment in the company, which has yet to establish a technology for mass-producing OLED screens.

Their reluctance also appears reflect the thinking of Chinese government, which provides subsidies to these manufacturers. Beijing is shifting its investment focus from displays to the chip industry.

One piece of encouraging news is that Apple, JDI's biggest customer, is expected to increase orders for LCD displays for new iPhones hitting the market this year following disappointing sales of the iPhone X, which features an OLED screen.

Other smartphone makers may also slow their shifts to OLED technology, giving a boost to JDI. Anticipating a swift change in its focus to OLED displays, the Japanese company had planned to take a write-down on LCD production facilities this fiscal year. But now with an anticipated rebound in demand, it is considering scaling down the charge by tens of billion yen.

Still, with plans to kick off OLED display mass production in fiscal 2019, JDI desperately needs to secure an outside backer. But when the company can seal the partnership deal is anyone's guess.

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