Sharp Corporation (OTCMKTS:SHCAY) (TYO:6753) will start manufacturing of LCD panels for iPhone 5S from its Kameyama Plant No. 1. There are expectations that the much awaited next generation iPhone from Apple Inc. (NASDAQ:AAPL) will be launched in the third quarter, according to Japan’s Nikkan Kogyo Shimbun.

The Sharp Corp logo is seen at the company's showroom in Tokyo

The capacity of Kameyama plant has not been fully utilized because of the decline in the LCD business of Sharp. The plant has used only 40 percent of its total capacity of 600 million units per month.

The declining revenues of Sharp Corporation (OTCMKTS:SHCAY) (TYO:6753) have been a high concern, and the company has taken the investments from companies like Apple Inc. (NASDAQ:AAPL) suppliers Foxconn and Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930). Samsung is the largest foreign stakeholder in Sharp.

Not only Sharp but a company in Japan, Japan Display, which is the combined display division of Sony, Hitachi, Toshiba and LG Display has also garnered orders for mass production of the display screens. LG Display is the worlds largest LCD panel maker based in Seoul.

The display of the next generation phone from Apple Inc. (NASDAQ:AAPL) will be identical to that of the earlier iPhone. The new features will have a fingerprint sensor, faster A7 SoC and the phone will run on iOS 7 mobile operating system.  In April, analyst Ming-Chi Kuo said that there can be delays in the launch of the iPhone 5S due to various hurdles coming up in implementation of the fingerprint sensors along with delay in iOS development.

The iPhone 5S is said to be a low priced phone, which would be available for the larger segment. The phone will be available in various colors with enhanced camera and processor.

Impact of the News

Sharp’s shares increased to a 10 month high in Tokyo trading after the news broke out that the troubled television maker will get an enhanced credit line from lenders and will also supply LCD panels to Apple. The shares shot up by 11 percent to 385 yen, which mark the highest since July 4 before trading at 369 yen as of the midday break.

The lender will provide Sharp Corporation (OTCMKTS:SHCAY) (TYO:6753) 150 billion yen ($1.5 billion) of credit according to Nikkei newspaper. The details of the agreement will be decided upon this week according to the source. The LCD panels will be manufactured from the start of June. Sharp is looking forward to an operating profit of 140 billion Yen.

Keita Wakabayashi, an analyst at Mito Securities Co, said that the news will have a good impact on Sharp Corporation (OTCMKTS:SHCAY) (TYO:6753)’s financing and production.