Capital injection for Sharp

Sharp has been suffering from low capacity use at its Gen 10 fab in Sakai, due to a lack of panel orders and strong competition from other TV brands worldwide.

Now Hon Hai (also known as Foxconn) in Taiwan will invest $0.7 billion as joint venture capital into Sharp. Hon Hai will own 46.5% of the Gen 10 (now a subsidiary called Sharp Display Product). Meanwhile, Sharp will outsource more LCD TV OEM assembly business to Foxconn.

Sharp needs support to improve its financial situation and find a solution for its Gen 10 capacity. Two years ago, Sony - the original joint venture partner with Sharp in Gen 10 - decided not to increase its share in the Gen 10 fab.

Sharp has been seeking investment partners in its Gen10 for some time, and it is believed the company has talked with Foxconn, TPV and CEC in China, among others.

Hon Hai is taking an important step to enlarge its LCD TV OEM business and strengthen its position against Korean counterparts, especially Samsung and LG. These companies, which focus on in-house production, are not Foxconn’s target users, but as leading brands, they have been pressuring other TV brands like Sony, Sharp, Toshiba and Panasonic.

With the panel support from Sharp Gen 10, Foxconn will strengthen its LCD TV business, especially in the 40, 60 and 70″ wide models.

This is not the first time Sharp and Hon Hai have come together. In July 2011, they created a strategic alliance in LCD TV panel technology, with a licence to Foxconn and its LCD affiliate Chimei Innolux, particularly in wide view angle and high transmittance processes.