TOKYO -- Japan Display is seeking financial assistance from its top shareholder, the Innovation Network Corp. of Japan, to secure funds for mass-producing the next-generation display panels that the company sees as key to its future.
The LCD manufacturer made a formal announcement Tuesday.
"The INCJ has promised to give us full support," Japan Display CEO Mitsuru Homma told reporters at the Tokyo Stock Exchange. Plunging smartphone demand starting in the January-March quarter, combined with payments for new facilities, dealt a blow to the company's finances, Homma explained.
Japan Display is virtually debt-free. But it has had to carry large inventories due to slumping smartphone sales by Chinese clients and Apple, eating into its cash reserves. The company has also had to shell out money for a new plant in Ishikawa Prefecture.
Producers of liquid crystal displays need to keep making huge investments to remain competitive, even though demand can be fickle. Japan Display decided that it had to build up its cash reserves in order to succeed.
An INCJ representative told The Nikkei that the public-private fund will continue aiding Japan Display as its largest shareholder but stressed that the INCJ "has not definitively agreed to provide financial assistance, and the details still need to be discussed."
Despite Homma's claim of "full" support, no final decision has been reached on whether to provide loans, guarantee liabilities or make an additional investment.
The INCJ exists to "promote the creation of next-generation businesses." Some at the fund may object to supporting Japan Display, given that LCDs are considered a mature industry.
South Korean players have already invested heavily in panels based on organic light-emitting diodes -- the area Japan Display hopes to focus on in the future. Samsung Electronics already churns out enough OLED panels for 300 million smartphones a year. Japan Display aims to begin large-scale production in 2018, but LG Display will likely also have that capability by then. As a latecomer struggling to scrounge up needed funds, Japan Display has a long, rocky road ahead.