TOKYO (Reuters) - A Japan Display Inc group firm aims to raise $900 million to mass produce OLED panels using new technology that will slash costs, a source familiar with the matter said - plans that sent shares in the Apple Inc supplier surging 24 percent.

Slideshow ( 2 images )

Display makers are looking at mass producing organic light-emitting diode screens with a lower-cost printing process and if Japan Display was first, that could help it catch up with South Korean rivals after long being a laggard in OLED technology.

Its affiliate, JOLED, which is majority owned by a state-backed fund, has been working towards using the technology to start mass production of medium-sized screens for medical equipment monitors in late 2018 or early 2019.

JOLED has now approached dozens of investors including Sony Corp and Canon Inc for funds, the Nikkei business daily reported on Wednesday.

Japan Display said in a statement the reported details were not something it had announced, but added that it was considering ways to utilize its domestic factories to mass produce OLED panels.

The source, who was not authorized to speak on the matter, declined to be identified.

OLED screens are gaining in popularity as they are generally thinner, more flexible and offer richer colors than liquid crystal display (LCD) panels. Apple has adopted an OLED screen for its new iPhone X. But high production costs are still keeping OLED screens from being used widely.

Bigger rivals Samsung Electronics Co Ltd and LG Display Co Ltd are also working on the new production technology but it is not clear who is in the lead.

Hiroshi Hayase, senior director at research firm IHS, said the printing method should result in products 30 to 40 percent cheaper than those made by the current evaporation method.

If it could be used to make large panels such as TV screens, that would be a major breakthrough for the industry as it could eliminate the color filters that are currently necessary.

“JOLED has taken a key step forward,” said Hayase. “It now seems a matter of investment,” he added.

For large panels, JOLED said it plans to license the printing technology to electronics makers willing to launch a production line.

Shares in Japan Display rocketed higher on the news it was seeking funds, which was first reported by the Nikkei, and they closed up 24 percent to give the firm a market value of $1.5 billion.

Japan Display also has separate plans to use the evaporation method to mass-produce smaller screens for smartphones from 2019 and is considering tapping new investors to fund that move.

Japan Display currently holds 15 percent of JOLED, but plans to take a majority stake. Sony Corp and Panasonic Corp each own 5 percent.

($1 = 112.5700 yen)