The Japanese screen maker aims to be the primary supplier of high-tech screens for Apple's wildly popular iPhones, the person told Reuters. Global iPhone sales, notably in China, have surged to make Apple the most profitable company in history.
Japan Display wants Apple to shoulder much of the expected JPY 200 billion ($1.7 billion) investment in the plant, which aims to be in operation next year, the source said on condition of anonymity as the talks remain confidential.
The Japanese company said in a statement that it was constantly pursuing opportunities to strengthen its competitiveness, including building a new plant. "No formal decision has been made regarding any matter that we need to disclose," it said.
The most likely site for the plant is in Ishikawa, central Japan, the source said. It would have a capacity greater than an existing facility in Mobara, southeast of Tokyo, which makes 50,000 of the 1.5 by 1.85 metre sheets a month for iPhone 6 screens and other uses, he said.
Japan Display Chief Executive Shuichi Otsuka said last year that the company needed a new plant as it was reaching capacity at Mobara.
But Japan Display this month reported a rebound to profit from two quarters of losses, boosted by demand from Apple and Chinese smartphone makers, in stark contrast with Japanese competitor Sharp Corp's shrinking panel business.
Extra orders from Apple would boost Japan Display in its rivalry with Sharp.
Japan Display's shares jumped 14 percent in early trade on the latest news before closing up 5.4 percent. Sharp fell 2 percent, while the benchmark Nikkei share index rose 0.4 percent.
Apple and Sharp both declined to comment on the reports.
© Thomson Reuters 2015