TOKYO (Reuters) - Loss-making Japan Display Inc (>> Japan Display Inc) is seeking about 100 billion yen ($890 million) from its main creditors to fund restructuring, a source with direct knowledge of the request said.

Fresh funds for the firm, which has been hurt by its late entry into organic light-emitting diode screens (OLED) and fluctuating demand for Apple's (>> Apple) iPhones, would come on top of 75 billion yen in aid late last year from its main investor - the state-backed Innovation Network Corp of Japan (INCJ).

The liquid crystal display manufacturer has tapped Mizuho Bank, Sumitomo Mitsui Banking Corp (SMBC) and Sumitomo Mitsui Trust Bank, the source said, adding that the creditors were willing to extend the loan if it was guaranteed by INCJ.

The source declined to be identified as talks on the matter were private. Officials at Mizuho, Sumitomo Mitsui Trust and INCJ declined to comment while a representative for SMBC was not immediately available for comment.

The request was first reported by the Nikkei business daily. It said INCJ would provide the guarantees and that further restructuring may involve halting production at its smartphone panel plants in the central Japanese city of Nomi and China's Jiangsu Province as well as cutting several hundred jobs through an early retirement offer.

Japan Display said in a statement it was looking at implementing drastic steps to reshape itself amid shifting market conditions.

"We will make an announcement when we reach a decision," it said.

INCJ helped form Japan Display from the ailing display units of Sony Corp (>> Sony Corp), Hitachi Ltd (>> Hitachi, Ltd.) and Toshiba Corp (>> Toshiba Corp) five years ago, but government intervention has so far failed to result in putting the firm on a solid business.

Apple is widely tipped to adopt OLED displays, which are thinner and more flexible than LCD screens, for its iPhone 8 expected in the second half of 2017, and Japan Display's lack of a presence in that segment of the market has put it at a major disadvantage.

INCJ's role in rescuing Japan's struggling tech industry could intensify as it is expected to play a major role in groups that are the front-runners for Toshiba's sale of its $18 billion chip business.

Japan Display's shares were flat at the end of the morning session, in line with the broader market.

(Reporting by Taro Fuse; Additional reporting by Taiga Uranaka and Sam Nussey in Tokyo, and Susan Mathew in Bengaluru; Editing by Edwina Gibbs)

By Taro Fuse