Can Japan Display Help Apple? The Street's Answer Might Surprise You
In a report published Friday, a group of JP Morgan's Asian-based analysts led by Narci Chang commented on Japan Display Inc's announcement that it will construct another Gen 6 LCD LTPS fab for Apple Inc. (NASDAQ: AAPL) with a capacity of 25,000 units per month.
Chang speculated that Apple is looking to secure a supplier for future iPhones and reduce its reliance on Sharp Corporation. The analyst added that the new Gen 6 LTPS capacity is enough to produce approximately 95 million units of 6 inch smartphones annually.
Chang also noted that Japan Display will finance its venture through its own cash-flow and "other receipts," likely prepayments from Apple with zero interests and comes with a volume commitment.
"Contrary to Apples previous prepayments to GT Advanced Technologies and Sharp, we believe Japan Display this time has probably reached a deal that allows the new fab to produce non-Apple products," Chang wrote. "This will remove significant volatility in the fab's loading rate during Apple product's off season, in our view."
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