Apple May Spend $1.7 Billion to Diversify Its Global Supply Chain

Japan Display Inc. may build a factory in Japan to increase panel production - Apple would cover much of the plant’s construction costs, and would get most of its panel output for its line of iPhone mobile devices. By Mitchel Broussard

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February 22, 2015

Foreign display manufacturer Japan Display Inc. (JPI) is seeking to be Apple’s next go-to source for iPhone screens in the future, according to someone “familiar with the matter” (via The Wall Street Journal).

With the increase in profit overseas, especially followingApple’s attempt at a bigger presence in places like China over the past few months, the source reported that JPI is hoping Apple takes much of the cost for the proposed plant’s investment.

As pointed out by Reuters, JPI is aiming for the plant to be operable by next year, and hopes Apple itself would pay much of the predicted 200 billion yen ($1.7 billion) cost of the project.

The unnamed source continued to describe the plant’s possible location, stating that Ishikawa, in central Japan, is “most likely” the site for the manufacturing plant.

JPI runs a plant southeast of Tokyo, in Mobara, “which makes 50,000 of the 1.5 by 1.85 metre sheets a month for iPhone 6 screens and other uses.” According to the source, the new plant would have a “greater capacity” than even JPI’s Mobara facility.

Related: ‘Staggering’ iphone Demand Helped Two of Apple’s Biggest Supply Chain Partners

JPI, formed from the troubled display portions of Sony Corp., Toshiba Corp., and Hitachi Ltd., has already seen a resurgence of profit after two consecutive quarter losses thanks to increasing demand from Apple-related devices.

Now it wants a bigger contract with the Cupertino-based company - and its record-breaking profits - to boost its own earnings even higher.

“We are reviewing various considerations to strengthen our business competitiveness, including new factories, but we haven’t made any decision yet,” Japan Display said in a statement Friday.

Japan Display was formed in 2012 through the merger of the LCD units of Sony Corp., Hitachi Ltd., and Toshiba Corp., with the help of the government-backed Innovation Network Corporation of Japan.