Toshiba Corp will spend about 100 billion yen ($1.19 billion) to build a factory to make small LCD panels, mainly to supply to Apple Inc for use in iPhones, Japanese business daily Nikkei said on Tuesday.

Its subsidiary Toshiba Mobile Display Co will build the facility in Ishikawa prefecture on the Sea of Japan coast and it will churn out low-temperature polysilicon LCD panels, which allow for high-resolution images, the paper said.

A Toshiba spokesman said the report was untrue and nothing had been decided regarding a new plant to build LCD panels for Apple.

Work on the plant will start by early next year, with production due to begin in the second half of 2011, the paper said.

Toshiba Mobile Display already makes low-temperature polysilicon LCD panels at a facility in the prefecture and its monthly production capacity of 8.55 million units is projected to more than double with the new factory, the daily said.

Apple will invest in the factory, the Nikkei said.

Toshiba's shares gained 0.5 percent to 442 yen in early trade in Tokyo, outperforming the benchmark Nikkei average, which dipped 0.1 percent.

(Reporting by NR Sethuraman in Bangalore and Tim Kelly in Tokyo;

Editing by S. John Tilak and Michael Watson)