Apple is reportedly negotiating to buy Renesas SP Drivers, a Japanese company that makes the semiconductors used in its iPhone screens.

Renasas Electronics Corp. decided to sell its 55% stake in Renesas SP Drivers as part of a restructuring effort in which it will leave the LCD business altogether, the Japanese news service Nikkei Asian Review reported Feb. 1. Renasas SP Drivers is the world’s largest seller of small- and midsize driver chips for LCDs, including those used by all three manufacturers of display screens for the iPhone.

Today, Renasas Electronics confirmed to Reuters that it was in talks about selling its stake in Renesas SP Drivers, but it did not offer further details. Apple declined to comment.

Two days after the the Nikkei Asian Review report, Renasas SP Drivers issued a terse, non-denial statement: "There were media reports regarding Renesas SP Drivers, which were published in certain media. The reports were not based on Renesas’s announcement and Renesas SP Drivers’ announcement and they cannot be confirmed or regarded as fact at this time."

Today, Renesas SP Drivers issued an identical response.

Apple’s interest in Renasas SP Drivers would be to further consolidate control over quality and cost in its supply chain as the smartphone market gets more crowded.

Rather than sourcing from several companies, as it usually does, Apple was caught having only one supplier for its iPhone LCD driver chips, according to Nikkei. It isn’t clear if Apple’s motivation for such a deal would be to keep from losing control of the supplier to a possible competitor or to take control of the manufacturing process in order to improve the quality of its iPhone displays.

LCD driver chips are the key component in determining the quality of a display’s quality and energy efficiency; displays account for about 10% of total energy use.

Apple has offered Renesas Electronics $479 million for its 55% stake, according to Nikkei Asian Review, which estimates the LCD driver subsidiary’s annual income at $577 million with a profit margin of 10%.

Apple’s most likely competitors for this deal would be Sharp, which owns a quarter of Renesas SP Drivers, and the Taiwanese chipmaking consortium Powerchip, which holds 20%.

The market for small and midsized driver chips for LCDs is expanding as smartphone sales rise, according to Nikkei Asian Review. Renesas SP Drivers holds the largest marketshare (about 30%), but close competition with Korean and Chinese companies has driven prices down.

Despite profit expectations of close to 10% for the SP driver unit, Renasas Electronics is selling it to focus on its core business of automotive and industrial chips and restructure its way out of losses it has suffered since the 2010 merger of Renasas Technology Corp. and NEC’s semiconductor business. Since the merger, the company has shed more than 11,000 workers, according to Japan Times.

The publicity drove Renesas Electronics shares up 10% Wednesday but didn’t please all the experts. Hideyuki Ishiguro, an investment analyst at Okasan Securities, told Nikkei Asian Review that, even after shedding many of its peripheral businesses to focus on car and industrial chips, Renasas Electronics has a lot to lose if it gets rid of a company in as pivotal a position as Renasas SP Drivers.

"It’s one of their core technologies," Ishiguro said. "I think it’s actually too good to sell."