Sharp dedicates an entire LCD plant to Apple: Executive cites 'volatility'

The Japanese company is devoting an entire plant to making screens for Apple, but according to a senior executive, that "presents a high level of volatility risk."

Sharp is a display supplier for Apple's iPads, including this Mini Retina model. Sarah Tew/CNET

A Sharp is allocating a large chunk of its LCD production to Apple -- but it isn't terribly sanguine about the prospect, a company executive said on Monday.

The entire output of the Japanese display maker's Kameyama No. 1 plant "goes to just one company (Apple)," according to an interview with Sharp Senior Executive Managing Officer Norikazu Hoshi published by Japanese newspaper Nikkei on Monday.

Hoshi, however, does not portray that plant's operations as financially sound.

"If you look at just this plant, it certainly presents a high level of volatility risk. But if we make LCD panels for smartphones in large quantities at the No. 2 plant, we can absorb the impact even when the No. 1 plant is not doing so well," he said to Nikkei.

The No. 1 plant uses sixth-generation glass substrate, while the company's No.2 plant is based on a more advanced eighth-generation substrate, Hoshi added.

The Sharp executive's comments about volatility echo a theme emerging from Japanese manufacturers that supply to Apple, including Japan Display. In short, having Apple as a customer leads to dramatic swings in production from quarter to quarter. And market growth for the iPhone is stalling in the face of other brands that run on Google's Android operating system.

Sharp will invest about 35 billion yen ($340 million, £202 million, AU$366 million) in the LCD business in the current fiscal year. Much of that is going to IGZO panels -- the same kind of panel used in the iPad Mini Retina -- Hoshi said.

Japanese display manufacturers are currently gearing up for the next generation of Apple products. Japan Display will be supplying screens for the iPhone 6 , while Sharp is expected to continue to supply panels for the next-gen iPads as well as other devices.