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Apple pays the price to stay on the bleeding edge

(Bloomberg opinion) – It seems that Apple Inc. can invest close to $ 1 billion just to keep its devices at the forefront.

Japan Display Inc., one of its leading display providers, said Friday morning it would be up to $ 400 million from the rescue partner Harvest Tech Investment Management Co. Nested in its two-page stock exchange statement was the revelation that the financing includes $ 100 million already committed by a client.

That customer is Apple, according to the story of Bloomberg News published at the end of June. TPK Holding Co. of Taiwan, another provider of long-term iPhone components, was able to join a $ 1.1 billion rescue package for Japan. That left the company looking elsewhere, and Apple stepped in to help fill the void.

This development comes a week after Apple's main screen provider, Samsung Electronics Co., made a cryptic reference to a "single gain related to the screen business" in its preliminary statement of second quarter results. The United States The company will pay up to 1 trillion won ($ 850 million) to offset the shortfall in organic light emitting diode (OLED) purchases, according to Electronics South Korea and analysts at Citigroup Global Markets. (Apple had requested a comment at the time of publication on Friday.)

The interesting thing about these two cases is that none of the payments corresponds to the purchase of components directly. Rather, they are simply providers that use the most advanced screens available. Samsung is one of the companies that preceded Apple in the incorporation of OLED screens in smartphones, but the iPhone manufacturer is the only one that buys them by tens of millions. It is based on Samsung's screen division for this to happen.

It is likely that Apple has blocked that offer promising to buy a minimum amount, and may have fallen short due to the recent weakness in the growth of the iPhone. At the same time, the US The company desperately needs alternative sources to make sure it is not for a single provider. That's where a rescue from Japan comes into play. The Japanese company said that its operating loss of 20.4 billion yen ($ 188 million) in the March quarter was higher than in the previous period "as a result of the research and development expenses for the preparation of production in OLED mass ".

Japan shows that being able to make many OLED displays is great news for Apple, as long as it does not get ruined before that happens. Apple, therefore, has an incentive to keep the company afloat.

Because global smartphone brands are running out of novel ways to enrich their offerings, it's crucial that premium devices like the iPhone maintain technological leadership. In a slowdown, Apple is starting to find the price of staying in the forefront.

To contact the author of this story: Tim Culpan at tculpan1@bloomberg.net

To contact the editor responsible for this story: Matthew Brooker at mbrooker1@bloomberg.net

This column does not necessarily reflect the opinion of the editorial committee or Bloomberg LP and its owners.

Tim Culpan is a Bloomberg Opinion columnist covering technology. Previously he covered technology for Bloomberg News.

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