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Apple pays the price to stay at Bleeding Edge

(Bloomberg Opinion) – Apple Inc. looks like it could put down nearly $ 1 billion just to keep its devices at the forefront.

On Friday morning, Japan Display Inc., one of its main providers of monitors, said it would receive up to $ 400 million from the bailout partner Harvest Tech Investment Management Co. Prior to its two-sided stock exchange listing, the revelation was that the funding includes $ 100 million already committed by a customer.

That customer is Apple, according to a Bloomberg News story published in late June. Taiwan's TPK Holding Co., another long-time iPhone provider, had been in talks to join a 1.1 billion Japan Display package but pulled out. It left the company who needed to look elsewhere, and Apple went in to help fill the gap.

This development comes a week after Apple's main display vendor, Samsung Electronics Co., made a cryptic reference to a "one-time-enhancement related to the display business" in its preliminary second-quarter income statement. US company will pay as much as 1 trillion won ($ 850 million) to compensate for the purchase of organic LED, or OLED, according to South Korea's Electronics Times and Citigroup Global Markets analysts. (Apple had not responded to a request for comment after publishing time Friday.)

What is interesting about both of these cases is that none of the payments seem to be buying components directly. Rather, they are simply deepening or compensating suppliers that Apple uses to produce the most advanced screens available. Samsung is among the companies that preceded Apple in integrating OLED screens into smartphones, but the iPhone manufacturer is the only one who buys them with millions of millions. It depends on Samsung's display department to make it happen.

Apple surely locked itself in that supply by pledging to buy a minimum amount, and it may have been brief given the latest weakness in iPhone growth. At the same time, the US company desperately needs alternative sources to ensure that there is no supplier. This is where a Japanese display box comes in. The Japanese company said its operating loss of $ 20.4 billion ($ 188 million) during the quarter was greater than the previous period "as a result of R&D spending to prepare mass production of OLED". [19659007] Japan Display That Can Make Lots Of OLED Screens Is Good News For Apple – As long as it doesn't go belly before it happens. Apple therefore has an incentive to keep the company afloat.

With global smartphone brands running out of new ways to spice up their offerings, it's essential for premium devices like the iPhone to maintain technical leadership. In a downturn, Apple begins to find out the price to stay at the hem.

To contact the author of this story: Tim Culpan at [email protected]

To contact the editors responsible for this story: Matthew Brooker at [email protected]

This column does not necessarily reflect the meaning by the editors or Bloomberg LP and its owners.

Tim Culpan is a Bloomberg Opinion columnist covering technology. He has previously covered technology for Bloomberg News.

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