Apple is increasing its orders for display screens ahead of the launching of the new iPhone this month, according to Mitsuru Homma, the newly appointed CEO of Japan Display. The tech giant is the biggest client of the Japanese screen manufacturer.
In an interview with Reuters, Homma emphasized that the weakness in China’s smartphone market and the broader economic slowdown in the country is not affecting Apple’s orders for display screens.
“They’re coming to us with more orders, saying ‘give us more, give us more’. They keep increasing,” said Homma.
Apple continues to experience strong growth in China
Apple CEO Tim Cook recently reassured investors that the company remains strong in China. In a letter to CNBC’s Jim Cramer, Cook said Apple continued to experience “strong growth” in China from July to August despite slowing economy, which prompted a global market selloff.
Cook said, “Growth in iPhone activations has actually accelerated over the past few weeks.” He added that the App Store in China achieved the best performance of the year during the past two weeks.
When asked about the new iPhone, The Japanese CEO commented that Apple is integrating a “difficult technology” on the device, but he thinks “ramp-up is going well.”
The tech giant is scheduled to introduce the iPhone 6S during an event at the Bill Grahan Civic Auditorium on September 9. Technology analysts believed that Apple integrated the Force Touch technology, which is available on the Apple Watch and the latest MacBook. Some analysts were concerned that the iPhone maker could face production problems because of the introduction of the Force Touch technology on the new smartphone.
When Reuters asked Homma about the new iPhone, he commented that Apple is integrating a “difficult technology” on the device, but he thinks the production is unaffected. The Japanese CEO said, “I think ramp-up is going well.”
The stock price of Japan Display climbed 3.84% to 378 yen on September 3 in Tokyo.
Analysts concern with Japan Display’s dependence on Apple
Some analysts expressed concern regarding the dependence of Japan Display on Apple amid China’s weakening economy. The total size of Japan Display’s with Apple is unknown.
In a note to investors on Thursday, Credit Suisse analyst Mika Nishimura wrote, “Although the strong relationship with Apple is certainly positive, Apple’s specifications are also quite high, and we estimate profitability is lower than on other Japan Display products.”
Japan Display was formed from the struggling display business units of Sony, Toshiba and Hitachi through a government-backed transaction in 2012. The company initially faced difficulty competing with Sharp and other Asian companies. The company recovered after receiving strong orders from Apple.
Japan Display is not considering a merger with Sharp
Last month, it was reported that Sharp is planning to sell a majority stake in its LCD business to Japan Display. In May, Sharp announced a restructuring and sought a $1.9 billion bailout from banks and promised to reduce its workforce by 10% or 5,000 jobs.
A spokesman for Sharp denied that the company is negotiating with Japan Display regarding its LCD business, but he stated that it is considering various options. “We have not entered into any negotiations with specific companies,” he said.
According to Homma, Japan Display is currently not considering a merger with Sharp, but he did not the possibility of a transaction in the future.
“We’re currently in the midst of various restructuring measures. We don’t have the capacity to consider such a move, and we haven’t been asked to do so by our major shareholder either. I think there might be reasons such discussions haven’t come my way. But when such talks come, it will probably come suddenly,” said Homma.