Rescue operations against JDI (Japan Display Corporation, JDI) are continuing.
Previously, the news showed that screen panel maker JDI is considering selling its main mobile phone display factory. The news said that it is likely that Apple or Sharp will take over. The sale has now been postponed due to the outbreak, but Apple has fulfilled its previous commitments. According to the Nikkei Asian Review, Report , JDI received $ 200 million in funding from Apple, and Apple is Obtained LCD production equipment of the same value from JDI’s Hakusan City plant in Ishikawa Prefecture, central Japan, and provided JDI with financial assistance in disguise. The two billion US dollars will be used to repay various amounts previously owed to Apple by JDI.
JDI decides to sell LCD production equipment to Apple before selling real estate to Sharp. It is mentioned in the report that JDI will concentrate on manufacturing LCD panels for smartphones at its factory in Chiba Prefecture.
Actually, due to the market downturn and JDI’s operating problems, the Baishan City plant has ceased operation since July last year. JDI has also paid over 8 billion yen to more than 1,000 employees who left the plant. (RMB 531 million yuan) of termination subsidies, this operation can now be considered as the company’s non-performing assets.
The Baishan factory was built by Apple and has provided iPhone with a large supply of LCD screens for several years. JDI still does not supply LCD screens for Apple ’s iPhone 11 and other products, but whether it is Apple or the entire mobile phone industry, the overall shift to OLED is already an irreversible trend.
But JDI cannot fall, either for the Japanese industry or Apple.
iPhone 9, last chance?
JDI and Apple are deeply bound. More than 60% of the revenue comes from Apple, a big customer, but success is also Apple, but also Apple. In 2017, Apple launched the iPhone X. coreJDI, the decline is inevitable.
Large-sized products such as iPad and Mac are still in the world of LCD screens. After all, the cost of large-sized OLEDs has increased geometrically. Previously, the main suppliers of the iPad series were LG Display and Sharp. JDI is still mainly small size.
The news shows that the new iPhones this fall will no longer have LCD models, including low-cost versions. The rumored iPhone 9 (or iPhone SE2) has become a key antidote for JDI.
This long-rumored “re-engraved product”, although production has been affected to some extent in the epidemic, has now gradually recovered and is on the market. Jon Prosser, a well-known foreign source, disclosed that Apple has held an internal meeting to determine the iPhone 9’s release date. The official release date is April 15, and shipments will follow one week later.
The iPhone 9 has basically been reported to be almost the same, continuing the classic design of the iPhone 6-8, a 4, 7-inch LCD screen, and the supplier has locked the JDI to supply screens for these generations of iPhone.
This may be the last chance for JDI. At the end of January, JDI has started using its Mobara factory to start producing iPhone 9 screens. This news has also received positive feedback from the market, and JDI’s stock price has risen sharply. At the time, LG Display, another major supplier of Apple LCD, had no longer competed because LCD production lines had been significantly reduced because of the full bet on OLED.
Canaccord Genuity analysts predict that the sales of entry-level iPhones in 2020 were estimated to be between 30 million and 40 million units. However, due to the epidemic, sales will decline to between 20 million and 30 million units. For JDI, this is also a good number. Entry-level iPhones are still quite attractive in markets where purchasing power is not outstanding. The huge sales volume of iPhone has at least ensured the downstream production capacity of JDI.
Help JDI get through the difficulties, and also give Apple hope to recover its debts. In 2015, Apple invested $ 1.5 billion to support the construction of the Baishan factory. JDI repays the debt in accordance with the supply screen method, and it needs to repay nearly 200 million USD, and throwing away the 200 million USD of this transaction, JDI alsoI owe Apple about $ 800 million, and now I really work to pay off the debt.
The other level of intention is to continue to consolidate the control of the supply chain. The LCD industry is declining now, but there is still a stock. The last point is “mosquito meat”. Apple also has to hold on to its trusted and trusted supply Business hands.
What is the future of JDI?
The other good news for JDI is that it finally has to wait for financial assistance. In February 2020, JDI announced that it would receive the support of 100 billion yen from Ichigo Asset Management, a Japanese independent investment advisory company. In contrast, Ichigo will acquire a 40% stake in JDI and become the largest shareholder of JDI. Financial data shows that JDI’s total assets are 476.624 billion yen and total liabilities are 577.237 billion yen, which is still a big pit.
iPhone 9 and financial assistance can solve the urgent need, but the future is still not clear.
In 2016, JDI plans to acquire JOLED and start building its own OLED production line. However, due to financial conditions, this transaction was put on hold indefinitely, which also caused JDI to miss the best entry opportunity. Nowadays, not only Samsung, but also the rising Chinese suppliers (BOE, Huaxing Optoelectronics, Visionox, etc.) are extremely difficult to surpass in a short time.
JDI chooses to start with a small size. Apple Watch Series 5 released last fall, JDI has entered the supplier list, although the initial volume is very limited, less than 20%, but after all, it is a first step. Apple has also continued to support JDI, and Tianfeng Securities analyst Guo Mingchen reported that Apple will gradually increase the number of orders and make JDI a major supplier. By 2021, the JDI supply ratio is expected to reach 70% to 80%.
Another major technological direction of LCDs is that JDI also has a certain layout on MIni LEDs. At Display Week in 2019, JDI showed the Mini LED backlight solution for 3.5-inch VR glasses with a contrast ratio of 200000: 1. Mini LED is regarded as the “savior” of LCD, and it is also one of the future solutions that Apple is betting on, but the commercialization is still far away.
JDI today can only withdraw money little by littleCome and try to get through the immediate difficulties first. At the November 2019 financial report meeting, JDI stated that orders from Apple’s new iPhones had grown, and revenue had shown a tendency to respond, and it would ensure a stable and profitable physique from the second half of the year (October 2019 to March 2020).
Cutting non-performing assets, starting with small sizes, seeking financial assistance, and so on, it seems that JDI is on a pragmatic path to survival. If Apple continues to launch cheaper versions of the iPhone (if it is almost necessary to stabilize emerging market sales), JDI will still have a bite to eat, but how dangerous it is to hang from a tree, JDI has already experienced it. In the future, whether it is Mini LED or OLED, JDI must go out of the comfort zone.