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Sharp's slim screen factory 'flogged to death' by Apple

Plant can't build enough working parts for Cupertino idiot-tax giant

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Sharp's production line of screens – purportedly for Apple's next-generation iPhone – is reportedly running behind schedule.

The moribund Japanese display-maker, which has never admitted to having Apple as a customer, said at the start of this month that its LCD plant in central Japan, a factory widely known to churn out gear for the fruity firm, had started mass production and shipping.

But a source told Reuters that Sharp's plant in Kameyama was struggling with low production yields on the fiddly new panels, turning the whole endeavour into an expensive one.

Other Apple suppliers, such as Japan Display and LG Display, have also fired up their factories to pump out thinner screens, rumoured to be a key component in the iPhone 5 that's expected to emerge on 12 September.

The new displays will feature built-in touch sensors, making them slimmer than previous iPhone screens and harder to manufacture. The new technology has made pundits ponder whether component inventories will be even tighter for this iteration of Apple's smartphone compared to previous generations.

The high costs of assembling the tricky new screens could be an issue for Sharp, which has suffered worsening investor confidence after huge losses and the possibility that fundraising deals could fall through.

Low demand worldwide for TVs and the strong yen have pushed Sharp deeper and deeper into the red; it lost $1.76bn (£1.12bn) in the quarter ending in June this year.

Foxconn daddy Hon Hai had struck a deal to invest in Sharp and its display business to help it out as a fellow Apple supplier, but it scrapped the agreement after Sharp shares fell. Hon Hai said it's renegotiating with the Japanese firm, but the manufacturing giant's chairman Terry Gou left Japan today without announcing the deal was done.

Meanwhile, Standard & Poor's downgraded Sharp's shares to "junk" status, warning that the company has weak cash-flow and is facing deteriorating market conditions, Bloomberg reported. The stocks slumped nearly 13 per cent today on the continued uncertainty. ®

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