Universal Display's phosphorescent OLED emitter materials Image source: Universal Display

What happened

Shares of Universal Display Corporation (NASDAQ:OLED) were up 10.4% as of 3:07 p.m. EST Friday following a report that iPhone display supplier Japan Display is in talks to receive financing with the likely aim of shifting its manufacturing lines to mass produce OLED displays.

So what

Citing "people familiar with the matter," The Wall Street Journal reported today that Japan Display is in "advanced talks" for a $703 million "bailout" from the government-backed Innovation Network Corp. of Japan. Innovation Network Corp., for its part, is Japan Display's single largest shareholder, with a 36% stake in the company.

Now what

That's not to say the funding is guaranteed to be used for Japan Display's OLED manufacturing -- alternatively, it could be used to improve Japan Display's LCD capabilities to better compete with OLED as the cutting-edge display technology becomes more ubiquitous. But it would hardly be surprising considering Apple is widely expected to transition its iPhone line to OLED by 2018, even reportedly striking an OLED supply deal with Universal Display customer Samsung Display earlier this year.

Moreover, during Universal Display's quarterly conference call last week, CEO Steven Abramson noted, "Japan has re-emerged in the past few months with increased development and investment activity, raising our optimism for Japanese OLED mass production in 2018, 2019, and beyond."

As such, I would be shocked if Japan Display was requesting this financing with anything but bolstering its OLED manufacturing capabilities in mind. And over the long term, Universal Display is arguably the greatest beneficiary of the move.

Steve Symington owns shares of Apple and Universal Display. The Motley Fool owns shares of and recommends Apple. The Motley Fool has the following options: long January 2018 $90 calls on Apple and short January 2018 $95 calls on Apple. The Motley Fool recommends Universal Display. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.