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Japan Display weighs $470m fundraising drive

Apple's plan to stick with LCDs for iPhones raises need to boost inventory

Japan Display supplies LCD modules for smartphones and other devices.

TOKYO -- Japan Display on Friday said it is looking at raising over 50 billion yen ($470 million) through a third-party share allocation and asset sales.

The share allocation alone would be worth over 30 billion yen. The liquid crystal display producer said it will put the plan to a vote at a board meeting the same day. An official decision is to be announced later.

The move comes as Apple, Japan Display's main customer, plans to continue using LCDs for some iPhones to be released this fall. There had been speculation that the U.S. company would adopt the iPhone X's organic light-emitting diode technology across the full lineup.

Sales of the 2017 iPhones remain sluggish, prompting Apple to play it safe. This means more demand for Japan Display's LCD panels, and the company is now looking to build up inventory before the next iPhone rush.

Apple's adoption of OLED technology last year put a further strain on Japan Display, which is set to suffer its fourth straight loss for the year through March 2018. The display maker has been exploring ways to rebuild its finances through a capital partnership with foreign companies, but talks with key Chinese negotiating partners have been stalled and were not expected to yield results by the end of the fiscal year.

This is why Japan Display is exploring a capital increase with investment funds. But existing shareholders may balk, wary that the move and the prospect of a capital partnership would dilute their stakes significantly.

Japan Display had a market capitalization of just 120 billion yen as of the end of Thursday. It revealed the fundraising plan after public broadcaster NHK reported earlier on Friday that the company was in final talks with domestic and foreign funds on an investment worth about 50 billion yen.

The Tokyo Stock Exchange issued a warning to investors, saying unconfirmed information about equity finance had been reported.

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