According to the Wall Street Journal, people familiar with the matter said that JDI, the supplier of Apple, is seeking investment from Taiwan Chenhong Group (TPK) and China Silk Road Fund, including a 30% stake in the company. The investment scale may exceed 60 billion yen (about $550 million).
According to the Wall Street Journal, people familiar with the matter said that JDI, Apples supplier, is seeking investment from Taiwans Chenhong Group (TPK) and China Silk Road Fund, including the transfer of 30% of the companys equity, and its future share-holding ratio is likely to rise. According to people familiar with the situation, the investment may exceed 60 billion yen (about $550 million).
JDIs biggest customer is Apple, which provides LCD screens for the iPhone. As of March 2018, more than half of JDIs revenue came from Apple, but in the latest batch of iPhones, only relatively inexpensive XR phones use LCD screens, and the market demand for XR is far below Apples expectations.
According to the Wall Street Journal, people familiar with the production plan say Apple may abandon LCD screens altogether in the 2020 iPhone series and adopt organic light-emitting diode displays (OLEDs) to achieve more flexible designs.
Last year, JDI shares continued to fall to a record low, falling more than 70% from 248 yen to less than 70 yen. In the past four years, JDI has been losing ground under the attack of rivals such as Samsung, with a total loss of $2.8 billion, forcing the company to seek bailout funds.
In 2016, JDI received about $703 million from Japanese government-supported funds. However, according to people familiar with the situation, the Japanese government said it was unable to continue supporting JDI and was willing to transfer control of the company to overseas investors.
People involved in the deal said that China Investment Group would initially not hold a majority stake, and that part of its funds would be used to buy JDI bonds that could be converted into stocks in preparation for a more comprehensive control of JDI in the future. JDIs largest shareholder, the government-backed consortium INCJ, will continue to hold JDI shares temporarily, but may sell JDI shares in the next few years. INCJ currently holds 25% of the shares. Other JDI shareholders include Sony, Hitachi and Toshiba.
People familiar with the situation also said that JDI plans to use the funds raised for daily operations and reach an agreement with China Investment Group as soon as mid-February, when the company will also publish quarterly results. China Investment Group is likely to win a majority of seats on the JDI Board of Directors.
In December last year, according to NHK TV, JDI negotiated with a consortium of Chinese companies and funds to accept an investment of about 50 billion yen (3.028 billion yuan) and the consortium would take about 33% of the shares. NHK said JDI hopes to reach an agreement by the end of March next year.
At the same time, the consortium will also invest an additional 500 billion yen (about 30.279 billion yuan) to build factories in China and use JDI technology to manufacture OLED panels. NHK regrettably commented that the deal would be an important turning point for Japans once booming display industry.
A person familiar with JDIs business plan said that even with investment from China, JDI still had difficulty getting out of the dilemma because it relied too much on the iPhone and did not do enough in reform.
Earlier, as sales of the iPhone slowed down, Apple announced a cut in revenue guidance and gross margin expectations for the first quarter of 2019.
JDI shares rose 22.70% to $0.80 on Tuesday. (Wen Yan)
Source: Editor-in-Charge of Wall Street: Wang Fengzhi_NT2541