Japan Display aims to bring some panel production back from China after coronavirus

Japan Display's logo is seen at a display of its products at its headquarters in Tokyo, Japan October 7, 2019. REUTERS/Kim Kyung-Hoon/Files

TOKYO (Reuters) - Japan Display Inc aims to bring some automotive panel production back to Japan after the novel coronavirus outbreak disrupted its supply chain in China, a company executive said on Friday.

Under the plan, Japan Display would boost production at its plant in Tottori, western Japan, to supply panels to major Japanese automakers, Kazutaka Nagaoka, chief manufacturing officer, said in an interview.

“We could have spared opportunity losses if we had our production in Japan,” Nagaoka said, referring to production disruptions at its Chinese plant due to a coronavirus lockdown this year.

Nagaoka declined to give a timeframe or an amount for the investment in the production shift, but said the company hoped to make a final decision on the plan as quickly as possible.

The world’s largest automotive screen maker produces panel cells in Japan and ships most them to its Chinese plant, where backlights, connectors and other parts are added - a labour-intensive process that requires constant manual work.

Nagaoka said advancements in machinery had helped automate the back-end processes, reducing labour costs even if they are done in Japan.

Its automaker clients also want their panels produced at automated lines for quality control reasons, he said.

Japan Display, which earns about 60% of its revenue from Apple, is aiming to beef up its automotive display business to reduce its dependence on the saturated smartphone market.

The company has agreed a deal to receive up to 110.8 billion yen ($1 billion) from Japanese investment manager Ichigo Asset Management, a critical bailout for the company that has long been dependant on publicly funded rescues.

Reporting by Makiko Yamazaki; Editing by Robert Birsel