Japan Display says will swing to January-March op loss as Apple orders sag

By Makiko Yamazaki

TOKYO (Reuters) - Japan Display Inc on Monday said it would swing to an operating loss in January-March, as client Apple Inc books slowing sales of its iPhone and while the costs of keeping up with rivals in smartphone screen technology rise.

The display maker forecast a fourth-quarter loss of 1.9 billion yen ($16.19 million) versus profit of 10.7 billion yen in the same period a year prior. It cited weaker sales from its "top client" - not identified but widely understood to be Apple.

The U.S. technology company late last month forecast its first revenue decline in 13 years and reported its slowest-ever increase in iPhone shipments, prompting analysts to say its period of exponential growth may be ending.

Japan Display also said rising research and development costs would depress profit, as it works to catch up with South Korean rivals in organic light emitting diode (OLED) panels.

Apple may adopt OLED technology for its iPhone as early as 2018, with candidate suppliers including LG Display Co Ltd and the panel-making division of Samsung Electronics Co Ltd, according to media reports.

Japan Display said last month it would start mass production of OLED panels in 2018.

The Japanese manufacturer was formed from a government-backed deal in 2012 from the ailing display divisions of Sony Corp, Toshiba Corp and Hitachi Ltd. It struggled in the months after an initial public offering in 2014, but recovered in the past year on strong sales to Apple.

At present, however, its shares trade about 39 percent lower than a year prior as investors fret about slowing iPhone sales.

Analysts have also said Japan Display is likely to face increased competition from Sharp Corp should its ailing rival be taken over by Taiwan's Hon Hai Precision Industry Co Ltd, otherwise known as Foxconn.

"I see a high possibility of our company winning the race," Chief Executive Mitsuru Homma told reporters during an earnings briefing. "We will steadily improve our technologies to get ahead of our rivals."

($1 = 117.3400 yen)

(Reporting by Makiko Yamazaki; Editing by Christopher Cushing)