Apple Supplier Japan Display Expands Smartphone Plant on Yen
Stock Chart for LG Display Co Ltd (034220)
Japan Display Inc., which supplies liquid-crystal displays to Apple Inc. (AAPL), is expanding a factory that makes panels for smartphones and tablet computers as the yen’s weakness helps spur overseas demand.
The company is boosting capacity of high-definition LCDs at its plant in Chiba Prefecture, east of Tokyo, President Shuichi Otsuka said in an interview yesterday. Japan Display plans to start the operations next month as it targets sales of as much as 800 billion yen ($7.8 billion) this year, he said.
Japan Display, the world’s largest maker of LCDs used in mobile devices, is trying to widen its lead by adding more products for tablets and expanding into car dashboard displays. The Tokyo-based company was set up last year when Sony Corp. (6758), Toshiba Corp. (6502) and Hitachi Ltd. (6501) spun off their businesses to a government-backed fund after struggling to compete with South Korea’s Samsung Electronics Co. (005930) and Taiwan’s Innolux Corp. (3481) in the TV display market.
“Our business is now on track,” said Otsuka, who previously was the chief operating officer at Elpida Memory Inc. “Our technology is unique, so it won’t be easy for other companies to do the same.”
The yen touched 102.76 per dollar this week, the weakest since October 2008. The Japanese currency has tumbled about 21 percent since November, making it the biggest loser among 10 developed-nation currencies tracked by Bloomberg Correlation Weighted Indexes.
“It’s positive for our business,” Otsuka said. Every 1 yen drop in the dollar boosts Japan Display’s profit by 1.5 billion yen, he said.
Apple Chief Executive Officer Tim Cook told analysts last month that new products are in the works for later this year and through 2014, without giving details. IPhone 5S production may start as early as late June, Jefferies Group LLC analyst Peter Misek said in a note this week.
Japan Display is ahead of its target with the expansion. Sales may reach between 700 billion yen and 800 billion yen in the year started April 1, from about 450 billion yen last fiscal year, Otsuka said. The venture targeted sales of 750 billion yen for the year ending March 2016, the government’s Innovation Network Corp. of Japan, which owns 70 percent of the company, said in 2011.
The company plans to remain profitable, after posting an operating margin of no more than about 1 percent last year, he said without elaborating. Japan Display wants to expand sales of displays used in cars such as instrument panels, Otsuka said.
Japan Display’s share of revenue in the global market for small- and mid-sized LCDs was 16.6 percent in 2012, according to NPD DisplaySearch. Sharp Corp. (6753) held 14.8 percent, followed by LG Display Co.’s 13.5 percent and Innolux’s 10.2 percent, the market researcher said.
INCJ invested 200 billion yen in Japan Display last year for its controlling stake. Sony, Toshiba and Hitachi each own 10 percent.
The display maker, which employs about 6,200 workers, has six factories in Japan and four overseas, according to its website.
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