Apple may buy display chipmaker

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Apple may buy display chipmaker

Apple, seeking to secure its mobile supply chain, has opened discussions to buy control of a Japanese venture that makes key microchips for its iPhone screens, sources familiar with the matter say. The talks on what would be a rare acquisition in Japan for the U.S. technology giant come as competition heats up in the smartphone industry, with pressure to produce larger, sharper and less battery-draining screens.

Apple’s once undisputed command of the global mobile electronics supply chain has diminished in past years as Samsung Electronics and other manufacturers that make smartphones powered by Google’s Android began to dominate the market.

That makes the advanced chips made by the Renesas Electronics division all the more valuable in future.

Renesas, a loss-making Japanese chipmaker that is restructuring to focus on its core auto business, is also in talks with other companies on selling its 55 percent stake in the chip division, known as Renesas SP Driver, people familiar with the matter said on Wednesday.

The people did not name the other companies, nor indicate the current status of the talks.

Desire for control over a venture that makes all the display control chips for the iPhone as Apple battles rival products from the likes of Samsung makes a compelling case for Apple to seek a deal, industry officials and analysts said.

Apple “certainly might not be happy that someone else might want it [the venture],” said Damian Thong, analyst at Macquarie. “Apple routinely buys in key technology components and software which they feel are important for the development of their products. It’s not new. What is unusual is that they’re doing it in the context of a Japanese firm.”

Renesas said on Wednesday it was considering selling the Renesas SP Driver unit, but declined to comment further. Apple did not respond to an email seeking comment.

The Nikkei business daily, which was first to report on the talks, said Apple could buy the Renesas stake for 50 billion yen ($483 million) by summer. It added that Sharp could also sell its 25 percent stake at Apple’s request. Taiwan’s Powerchip owns the remaining stake. Shares of Renesas surged after the report by as much as 19 percent to 934 yen, their highest in more than three years. They pared those gains to end up 6 percent at 831 yen, compared with a 1 percent rise in the benchmark Nikkei average.

A deal by Apple would be a rare foray into a Japanese technology industry that has suffered from aggressive competition by ambitious rivals like Samsung in the last decade.

“There’s no doubt that, for Apple, the question of who buys Renesas SP is a matter of grave significance,” said one Japanese display industry source, who asked not to be identified.

AP


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