Apple, Sharp said to spar over displays: 'Don't supply to Samsung'

Apple owns a big chunk of LCD production at a Sharp facility. Now Sharp would like it back, thank you.

iPhone 5S: Sharp makes the display, with considerable help from Apple. Apple

Apple and Sharp are sparring over production equipment, providing a window into Apple's sizable role in manufacturing the components it uses. And Samsung is part of the bickering, according to a Japan-based report.

Sharp is seeking to buy production equipment back from Apple at Sharp's Kameyama Plant No. 1 in Mie Prefecture, according to a report in the Saturday edition of Japan's Nikkei, a business-focused publication.

Last month a senior executive at Sharp revealed that the entire output of the Japanese display maker's Kameyama No. 1 plant "goes to just one company (Apple)."

Now we're learning that Apple actually owns a big chunk of that production and Sharp wants it back.

The No.1 Kameyama plant now runs at an "operating rate above 90 percent," Nikkei said, and makes displays for the "iPhone 6" models due later this year.

Sharp is offering 30 billion yen (about $293 million) to complete the deal, Nikkei said, citing sources.

Why? Sharp wants to diversify away from Apple -- whose production requirements can swing wildly from quarter to quarter -- and use that production for Chinese smartphone manufacturers.

But there is one major stipulation. "The US technology giant is said to be demanding that the Japanese company not supply panels to Samsung, Apple's biggest smartphone rival," Nikkei said.

If true, that would eliminate one of the world's largest display customers. While Samsung uses its own in-house production of OLED displays for its Galaxy series of smartphones, it uses LCDs -- sometimes sourced from outside the company -- for other products.

Sharp is trying to build up its IGZO (indium-gallium-zinc oxide) LCD business, which the company touts as an energy-efficient display technology.

CNET has contacted Apple for comment. We will update this story when we have more information.

Sharp's Kameyama plant. Sharp