Update: IGZO: Vision for the Future [a special advertising section by sharpusa.com in The Wall Street Journal, Jan 7, 2013] which was timed for the CES 2013 opening and was used as a detailed landing site for banners put everywhere like here with view (Jan 20):
Liquid crystal display (LCD) performance is about to take another leap forward. Existing LCDs have given us remarkable quality in HDTV, tablets and smartphones, as well as reasonably low power consumption. But Sharp Corporation is on the verge of delivering a new technology that will enable much higher resolution and significantly lower power consumption. More
The hunger for display resolution will probably never be satisfied until displays are indistinguishable from a printed page and as nuanced as a watercolor. IGZO takes a large step in that direction by enabling very high pixel-per-inch counts on small displays and Ultra-High Definition on larger monitors, while retaining brightness. More
The great thing about a technological breakthrough like IGZO is that it makes dreams come true. Yesterday’s dreams, today’s dreams, tomorrow’s dreams. More
Update: Capital Alliance with Qualcomm, Inc. and Display Technology Development Agreement with its Subsidiary Pixtronix, Inc. [Sharp press release, Dec 4, 2012]
Sharp Corporation (hereafter “Sharp”) today announced that the Company has reached an agreement with Pixtronix Inc. (hereafter Pixtronix), a subsidiary of Qualcomm Incorporated (hereafter “Qualcomm”, NASDAQ: QCOM), concerning the development of Pixtronix’s MEMS*1 displays. In addition, Sharp signed the capital alliance agreement and will issue new shares by a third party allotment (hereafter “This Third Party Allotment”) with Qualcomm Incorporated, a world leader in 3G, 4G and next-generation wireless technologies, as the allottee.
MEMS display to be developed jointly by the two companies is a display using ultrafine process technology and existing display manufacturing infrastructure with features including high color reproducibility and low-power consumption. The development for commercialization of MEMS display will be achieved by integrating Sharp’s core display technology, IGZO*2 and MEMS display technology of Pixtronix.
In addition, Sharp is planning to accept up to 9.9 billion yen*3 from Qualcomm in equity investment to pursue this joint development. This capital will be used for the development of MEMS display and necessary capital investments related thereto targeting for the achievement of the technology for commercialization.
With this agreement, the two companies will consider the possibility of further collaboration of chipsets by Qualcomm Technologies, Inc., a wholly-owned subsidiary of Qualcomm Incorporated and IGZO-based display technology for lower power consumption and higher performance of mobile terminals.
With this agreement, Sharp will accelerate its strategy for growth in small- to medium- sized LCD business with IGZO-based display technology as its core, and expand its revenue and corporate value.
*1 MEMS: Micro Electro Mechanical Systems
*2 IGZO: IGZO (InGaZnO) is an oxide comprising indium (In), gallium (Ga), and zinc (Zn). A thin-film transistor using this material has been developed by Sharp in collaboration with Semiconductor Energy Laboratory Co., Ltd. (a company based in Kanagawa, Japan, and led by President Shunpei Yamazaki)
*3 Equivalent to 120 million U.S. dollars calculated by exchange rate of December 3, 2012
Summary of the joint development and capital alliance
1. Development for the Commercialization of Next Generation Display
- The next generation display will be jointly developed integrating Sharp’s IGZO-based display technology and Pixtronix’s MEMS display technology. The joint development will establish facilities in the LCD panel plant in Sharp Yonago Corporation (location: Yonago city, Tottori prefecture, Japan) for development of the technology for commercialization.
- The development for next generation displays and necessary investment will begin immediately. At the point when the development of the technology for commercialization is confirmed to be feasible, we will move to the next stage by implementation of equipment targeting to achieve mass production technology.
2. This Third Party Allotment
Sharp will issue new shares by third party allotment with Qualcomm as the allottee by each stage of joint development of the technology for commercialization. The second stage is contingent upon achieving certain milestones.
<Notice Regarding the Execution of Capital/Business Alliance Agreement with Qualcomm (US Company) for the Joint Development of Next Generation MEMS Display and the Issue of New Shares by Third Party Allotment (PDF:83KB)>
Update: Foxconn aims to land iTV orders by investing in Sharp, says CMI former executive [DIGITIMES, June 29, 2012]
Foxconn Electronics’ investment in Sharp is aimed at securing iTV orders from Apple, which will be a positive development for the flat panel industry if the strategy works, according to Ho Chao-yang, former president of Chimei Innolux (CMI) [also controlled by Foxconn] and current chairman of Chi Mei Materials Technology.
It is a win-win strategy for Foxconn and Sharp, and the tie-up is believed to be able to create new markets, Ho stated.
In addition to benefiting the flat panel industry, the launch of iTVs will also benefit polarizer makers, including Chi Mei Materials, Ho added.
Chi Mei Materials posted net profits of NT$1.43 billion (US$47.73 million) or an EPS of NT$3.37 in 2011.
Foxconn [Hon Hai] `Gamble’ on Sharp an Apple TV Bet [Bloomberg YouTube channel, March 28, 2012]
Updates: Hon Hai Estimated to Ship Some 10 Million LCD TVs This Year [CENS, May 8, 2012]
[The Shanghai office of the] Market research firm DisplaySearch [in preparation to the 2012 China Smart TV and Smart Display Conference] estimated Hon Hai Precision Industry Co., Ltd., currently the world’s No.1 contract electronics manufacturer, to ship close to 10 million LCD TVs this year thanks to hefty contracts from Sony and Sharp.
Sony has contracted Hon Hai to supply eight million TVs while Sharp has designated the contract supplier to ship 1.5 million TVs this year. Hon Hai has acquired many of Sony’s overseas factories and bought into Sharp in order to secure steady contracts with the two brand name suppliers.
People say Hon Hai is likely to acquire Sharp’s TV factories in mainland China, Indonesia and Mexico to expand its contract TV manufacturing capacity.
Sharp plans to deliver 12-13 million TVs this year while Sony projects to ship 19 million TVs. Both companies will ramp up outsourcing.
As Hon Hai is the primary recipient of the contracts, other contract suppliers like Wistron Corp. are estimated to receive reduced number of contracts from the two companies. Wistron is projected to ship 4.8 million TVs this year, around half the number it shipped last year.
Hon Hai is posing a challenge to the world’s No.1 contract supplier TPV Technology Corp. with the bright shipment estimate. TPV shipped 13-14 million LCD TVs last year to big-name suppliers including Philips, Sony, Vizio, Best Buy, TCL and Skyworth. Its 2012 shipment is projected at 15 million systems.
Compal Electronics Inc. has put its 2012 shipments of LCD TVs at eight million systems mostly thanks to contracts from Toshiba, which will increase outsourcing to 70% of its output this year.
Samsung also revises strategy to begin outsourcing the TVs, planning to depend on contract suppliers for around 30% of its total output this year. This year alone, the company aims to ship 45 million LCD TVs.
– Special analysis: Hon Hai into sharp and subsequent effects [DisplaySearch Shanghai office press release, May 3, 2012] as traslated by Bing (or the alternative translation by Google)
NPD DisplaySearch Shanghai Office, May 3, 2012-the flat panel display industry as a whole in the near future the most shocking news is Hon Hai into sharp’s investment. Be held in Shenzhen on May 24- DisplaySearch 2012 smart TVs in China Summit Forum [see the English version of 2012 China Smart TV and Smart Display Conference]will provide an in-depth analysis of industry news and discussion between participants and Panel and an oversized TV Panel development trends. For more details, please refer to the official Web page of the Conference www.DisplaySearch.com.CN.
On March 27, 2012, Hon Hai and sharp have announced the following two types of investment decisions.
- Hon Hai gets sharp will invest 800 million dollars approximately 11% shares, Hon Hai also became sharp’s largest shareholders, this will ensure that the Hon Hai can be directly involved in operation sharp liquid crystal display sector and related technology research and development projects.
- Hon Hai gets sharp to invest about 800 million dollars in Japan, Sakai 46.5% stake in ten lines, thus ensuring that Hon Hai can has about half of the ten generations line capacity and ownership of the output panel products.
After the investment of the sharp, Hon Hai in the two panel manufacturers in the possession stakes: Chimei 12% equity 10% equity and sharp. Our blog posts in March 27, 2012 (DisplaySearch Blog) , “Hon Hai investments Sharpe-10 line joined the competition with Samsung and LG” (Hon Hai Invests in Sharp’s Gen 10 – Joining to Compete with Samsung and LG) have discussed the background and impact of this massive investment, further analysis of this article will be on the …
Hon Hai and before its investment stake among panel makers Chi Mei, has established in the past a number of strategic alliances with the sharp, specific terms are the following several points:
- Hon Hai was sharp LCD module Assembly contract manufacturer.
- Sharp UV2A photo distribution to it by technology licensing technology licensed to Chi Mei, sharp has helped us improve and odd in Taiwan 7 ‘s and 8 ‘s line of light distribution to the production process of climbing.
- Sharp LCD TV OEM business orders it to the company.
- Chi Mei started to supply some not for the production of the sharp LCD sharp LCD TV.This sharp 8 generations it wire into metal oxides (Oxide TFT) production process and the capacity utilization rate of 10 lines to reduce gradually increased.
- Hon Hai is a major machine-Assembly of the Apple iPhone and iPad. At the same time, sharp is a major Panel suppliers for iPhone and iPad. Both have worked closely together to address the production of Apple mobile phones and tablet computers and technology issues.
- Hon Hai is also a main unit of the Sony LCD TV Assembly; at the same time Sony purchased from a sharp LCD TV panels, mainly sharp 10-generation production line of 40-inch and 60-inch Panel and Panel provides to its television assembly plant for Assembly. In other words, sharp and Hon Hai on Sony LCD TV products to cooperate on the project with indirect relationship.
Taking into account these relationships, you can guess Hon Hai and sharp through both direct and indirect cooperation for a long time on the other side there is a certain understanding. This fusion of the two companies ‘ corporate culture would be very helpful.
Hon Hai into sharp and influence
Once the company into sharp, lots of new status will appear. Direct effect is Hon Hai will obtain sharp 10 lines of a large production capacity, as well as many leading LCD Panel sharp technology. With such huge sums of money into, Sharpe must also be able to improve its financial position and balance of expense reports. According to our analysis, there will be the following:
50% 1, Hon Hai will obtain sharp 10 lines of capacity control
LCD TV market in the current situation, sharp 10 line capacity utilization has been poor.Its total capacity is 10 lines 72K mother glass into a month, but Sharpe has been unable to get enough orders to meet the maximum capacity, capacity utilization is not high.Sharp 10 lines are now mainly produce 40-inch, 60 and 70 inch panel products, but in the first quarter of this year, only input 42k of glass per month. And sharp originally planned in two or three quarters of this year reduced input to 35~36k per month with a minimum of cost. After the arrival of Hon Hai will be by looking for more orders to meet the remaining close to half of the capacity requirements. At the same time, 40-inch, 60 and 70 inch does not singularly American TV panel production within product list, so relatively speaking on the impact of the Chi Mei is also relatively small.
Table a, sharp 10-generation size glass line inputs (in thousands of pieces/month)
Data source: Quarterly Large-Area Production Strategy Report , Q2’12-Q4’12 to forecast values
Table II, sharp glass 10 lines into the size ratio
Data source: Quarterly Large-Area Production Strategy Report, Q2’12-Q4’12 to forecast values
2, the company will expand sharp’s LCD TV manufacturing
Company plans produce 9.5 million in 2012 LCD TV sets, including 1.5 million of the 8 million units of Sony and sharp. Hon Hai was a few years ago Sony and Sony’s LCD TV assembly line production. With sharp Panel capacity and technology, Hon Hai will expand its OEM business. Sharp LCD 2012 TV shipments expected to reach 1,200 to 13 million units, in other words 1.5 million accounted for 12.5% of the Hon Hai worker, compared to the last quarter of 2011 only 3.2% sharp LCD TV is Hon Hai worker, has a good growth. If Hon Hai is sharp more OEM orders, TPV and other contract manufacturer Wistron orders will be directly affected.
Table three, sharp LCD TV manufacturer and percentage list (Q4’11)
Data source: Quarterly LCD TV Value Chain Report
3, Hon Hai will contact sharp many industry-leading Panel technology
Not only large-size LCD Panel technology, Hon Hai will also get sharp’s small and medium size panel technology and mobile devices. As sharp’s largest shareholder, Hon Hai will be greater use of sharp’s reserves of power engineering technology to strengthen its display technology. These technologies include LTPS (low temperature poly silicon, sharp called the CGS), oxide TFT,UV2A,RGBY the four panels of the color spectrum, and a number of other important related technologies. Hon Hai’s need to leverage these technologies to assist them in deep in China Shenzhen Super 5 line shifts from amorphous silicon to LTPS process and Hon Hai in Chengdu city LTPS 6 generations of the construction of a new line-Tianyi display 6 generations line of science and technology, these technologies will help a lot. Rumor has Apple will launch a new display technology used in LCD TV products, Hon Hai can also use a sharp order to win Apple’s advanced technology projects. Even more interesting is that shown in the following figure, Sharpe is also a major patent holders of the naked-eye 3D technologies, which would also become a major advantage of Hon Hai.
Figure, naked-eye 3D technology patent ownership
Data source: Synergytek Consultancy
4, Hon Hai will be on material procurement of parts and components to help sharp
Hon Hai to components suppliers, strong negotiating abilities known to the industry. In his intervention after sharp 10-line operation, Hon Hai is its powerful procurement negotiation skills can also be used to assist the sharp reduction of parts procurement costs.
5, the Chi Mei will benefit from Hon Hai and sharp’s new relationship
Chi Mei was originally through the payment of licensing fees, Forms Panel gets sharp UV2A technology production and supply to the sharp. After this investment, the company also owns shares of the two companies and 12%, Hon Hai will have the opportunity to coordinate between the two companies, greater support of Chi Mei to get sharp, even you can reduce licensing costs and sharp agreement to pay.
6 Panel, sharp will be able to get more customers
Sharpe has been dominated by self production, its LCD TV panels from the main internal supply. In the past, sharp had planned to rely on its strong customer base high-generation panel production capacity expansion, but sharp panel facing a Terminal product under the brand over competitors ‘ challenges. Currently main supply Panel for sharp TV sharp, Philips, Samsung, Sony, TPV and (as described in the following table), Hon Hai after intervention, Hon Hai helps Sharpe to find more customers. However, because there is a competitive relationship between, Hon Hai allows sharp continues to supply to Samsung and TPV would face uncertainty. In addition, Philips and TPV TPVision has a joint venture, and TPV compete on many OEM business with Hon Hai, so delicate.
Table four, first quarter of 2011 sharp LCD TV Panel’s main customers
Data source : Quarterly LCD TV Value Chain Report
Hon Hai and sharp the next possible courses of action
Analysis and judgment based on NPD DisplaySearch, we believe that the Hon Hai will then take the following action:
- Hon Hai could get further sharp located in China, Indonesia and Mexico’s TV manufacturing plant. After getting these manufacturing plants, Hon Hai will also further consolidate its important position in the Sharpe television manufacturing business.
- North America’s leading brand of LCD TV Vizio may balance Hon Hai and sharp’s resources in an attempt to form a new supply chain, and this will also help to Vizio in markets such as China and Europe have more choices. Vizio LCD TV OEM customers currently Hon Hai. This investment Vizio can seek more flexible company and Sharpe’s contract manufacturing and supply Panel. Sharp 60 inch to 70 inch Vizio to enrich their product lines are also useful.
- Hai dedicated business team formed to sharp 10-line business and plant operations.Sharpe 10 lines for the business group supply and capacity allocation, customer choice, Panel pricing and so on all have the right to decide; 10 lines of course they also need to be responsible for the sales and financial performance. Therefore, Hon Hai for sharp TV’s growth in the global market will have a significant impact. Hon Hai was also needed on the productivity of 10 lines to maintain a higher capacity utilization and rational distribution planning is responsible for.
- The company want to optimize the productivity of 10 lines, and clearly is the best cut of 10 lines of products are more than 60 products. Target customers will be sharp, Vizio (60 and 70 inch), Sony (60 inch), Panasonic (60 inch) and channel in mainland China customers (such as SUNY), Vizio, and so on. Now sharp Samsung 60 inch LCD TV Panel supplier, the future is likely to gradually fade. Therefore, Samsung may have alternative sources of supply for its 60-inch TV Panel.
- Samsung on a 60 inch TV products may be forced to only get a supply from Samsung Panel, Samsung will also focus on the 65-inch, 65 inch Panel can have friends, strange, after all, in the United States, BoE and Panda, and many other vendors.
- In order to promote its 60-inch product, best time will be the second half of 2012 television season, especially the November Black Friday sales season in North America.Therefore, Hon Hai will begin and the 60 inch product strategy 10 lines of its potential customers to discuss possible cooperation plan. Example is most likely cooperation, sharp panels and company Foundry manufacture mode of cooperation, between October and November this year in terms of costs and prices to attract customers.This terminal products price LCD TV market this year will have a certain effect.
The impact on other television brands and contract manufacturers
Before the Hon Hai to fund, sharp selling its 10 lines for production of 60-inch products are very positive. For example, in last year’s Black Friday sales in North America, sold its 60-inch LCD TV CCFL Backlight only $ 999. Now with Hon Hai’s power, sharp 60 inch product pricing strategy may be more active.
Hon Hai-sharp Alliance will lead to more intense competition, and also brought more price cuts urge the whole supply chain. Sharp in 2011 in North America and Europe by the end of the 60-inch low-price policy has caused a certain amount of pressure on competitors, already there are concerns in the industry now, price wars in particular, more than 60 inch price war, teamed up with Hon Hai and sharp and is only just beginning, and not what we want to become relaxed.
Of course, Hon Hai and more than 60 inch sharp product policy also means that 60-inch product penetration will further improve in the world, particularly in China and the United States market. Hon Hai to sharp’s investment will also affect other contract manufacturers such as performance of the TPV and Wistron. Now with sharp panel power, Hon Hai in the foundry business will be even more powerful.
For more industry news, master the first flat-panel displays and television industry development and welcome to NPD DisplaySearch 2012 China smart TV Forum .Conference invite the leading television brands, Panel manufacturers, operators and technical programmes, covering Intelligent interactive, 3D TV and flat panel industry and networking with naked-eye 3D, AMOLED, LED backlight, TV technology and market value chain. Global sound control, smart synchronization procedure and intuitive man-machine interface control lead program Nuance, Flingo and Hillcrest Labs is also a keynote speech. In addition, NPD DisplaySearch special brings 2012 global TV for consumer survey results to share, as well as the analysis of the usage of network TV and 3D TV.
Welcome to enjoy early bird discount prices, costs include the two-day meeting of the Conference, information (including USB), afternoon refreshments and VIP dinner, is an extension of your contacts, listen to different views and ideas best occasion for policy.For more details, please refer to the Conference Web site www.DisplaySearch.com.CN,or please contact Shanghai offices.
Luo Mei-Director of marketing, DisplaySearch China
Phone: +86-21-62752555 Mobile phone: +86-139-1738-2072 Fax: +86-21-32097567 E-mail: firstname.lastname@example.org Company Web site: www.displaysearch.com.cn
– Commentary: The battle cry in the global LCD TV market [DIGITIMES, May 4, 2012]
– CEC-Panda, TPV to jointly set up 10G LCD panel line in Nanjing [DIGITIMES, May 4, 2012]
China-based CEC-Panda LCD Technology and Top Victory, a subsidiary of TPV Technology, will jointly invest CNY35 billion (US$5.57 billion) to set up a 10G line for the production LCD panels. CEC-Panda will take up a 99.2% stake in the 10G line, according to an announcement by the companies.
The 10G line will focus on the production of large- and ultra large-size LCD panels for local brand TV vendors in China.
TPV said the establishment of the 10G plant will save a substantial amount of import tariffs due to the local availability of large-size TV panels in China, while strengthening its global competitiveness.
The 10G line has a cost advantage for the production of large-size panels, according to industry sources. Glass substrates at the 10G line can be cut into eight units of 60-inch TV panels compared to a yield of three units from the 8.5G lines at Samsung Electronics and LG Display, the sources indicated.
However, Taiwan-based panel makers are currently reluctant to commit investments on 10G lines due to heavy capital requirements and the financial strain, the sources commented.
– TPVision [TP Vision] likely to showcase OLED TVs in 2012 IFA, say sources [DIGITIMES, April 17, 2012] TP Vision
TPV Technology has finished a takeover of LCD TV business operations from Philips through the establishment of a joint venture, TPVision [TP Vision], which is expected to showcase OLED TVs at the 2012 IFA consumer electronics trade fair to take place in Berlin, Germany from August 31-September 5, according to industry sources.
TPVision [TP Vision] is likely to purchase large-size OLED panels from LG Display for its production of OLED TVs, the sources noted.
For 2012, TPVision [TP Vision] will continue to launch a series of high-end LED, 3D, and smart TVs under the Philips brand, including the Philips 3500, 4000, 6000 and 7000 lineups, said the sources.
In China, TPVision [TP Vision] will release the 5-series of Philips-branded models, including PFL5825, 5820 and 5721, supporting Philips’ Ambilight and AmbiwOOx technologies, added the sources.
– Increased competition in TV sector as Korean brands promote OLED TVs [DIGITIMES, April 30, 2012]
Competition in the TV sector is continuing to grow as Korean firms are reporting increased sales and developing their TV technology.
Samsung Electronics’ consumer electronics business, which includes TVs, saw its operating profits grow 550% on year to US$467 million in first-quarter 2012 as Smart TV and LED TV sales increased. This is mostly in part because of the firm’s success in commercializing technologies for Smart TVs, OLED TVs and direct-type LED TVs, commented industry observers.
Despite Japanese brands designing TVs that have 3D and Internet connection features, Korean-brand TVs have better voice-controlled functions and are more advanced with OLED technology, added the sources.
With Samsung setting a shipment of 48 million LCD TVs, and LG Electronics 46 million for 2012, the target of Sony, the third laregest TV vendor in 2011, is only 20 million units. Sony says its focus has shifted from boosting unit shipments to providing high value added products.
However, Samsung is set to merge its subsidiaries, Samsung Display, Samsung Mobile Display and S-LCD into one for OLE technlogy development, with the sources saying OLED technology mature may not mature until 2013-2014. However, the sources said Korean manufacturers will get the upper hand on the OLED industry before Japanese and Taiwan brands, which will pose challenges in the market.
– China TV firms see increasing sales as domestic demand heats up [DIGITIMES, May 7, 2012]
China TV firms have overtaken Japanese and Korean ones in China’s market as Chinese consumers are increasingly purchasing LCD TVs.
Sources said China brands are pushing their products domestically mainly in third- and fourth-tier cities as populations there are seeing economic growth.
Chinese brands have smart TVs similar to Korean and Japanese brands with functions such as voice control and cloud computing, and they have price advantages over Japanese and Korean ones, making their TVs a popular choice for domestic consumers added sources.
Chinese brands are looking to become more competitive by putting more added value features in their products and are figuring out strategies for expanding sales abroad amongst Korean firms pushing their OLED technology and Japanese firms lowering prices for high-end LCD TVs.
Display Research, however, stated that China’s market will see a big shift in 2012 as past government subsidies for purchasing new energy efficient TVs have already expired, making China’s TV brands more reliant on what kind of competitive edge they can offer for consumers.
– Foxconn may receive large-size TV orders from Vizio, say sources [DIGITIMES, May 7, 2012]
Foxconn Electronics is likely to also land large-size OEM TV orders from Vizio in addition to existing clients including Sharp and Suning Appliance after it took up a 46.5% stake in Sharp’s 10G LCD panel line, according to industry sources.
The inclusion of Vizio into the Sharp-Foxconn alliance is also expected to result in a reduction in shipments of 60-inch TV panels to Samsung Electronics, which has been counting on Sharp and in-house facilities for the supply of large-size panels, the sources indicated.
The possible shift of shipment policy at Sharp will force Samsung to focus on 65-inch products with the 65-inch panels coming from AU Optronics (AUO), Chimei Innolux (CMI) or even BOE Technology, the sources noted.
Foxconn is expected to see its shipments of OEM TVs reach 10 million units in 2012, including eight million units to Sony, 1.5 million units to Sharp and the remaining to Panasonic, Vizio and Suning, said the sources.
Foxconn’s increasing shipments of OEM TVs will also affect rival company Wistron, which is expected to see its OEM TV shipments slide to five million units in 2012 compared to eight million in 2011, the sources estimated.
End of Updates
Sharp Establishes Strategic Global Partnership with Hon Hai Group [Sharp press release, March 27, 2012]
Sharp Corporation (hereinafter “Sharp”) entered into agreement today with Hon Hai group, the world’s leading EMS (electronic manufacturing service) company, to establish strategic global partnership to collaborate in various business fields, and to issue new shares to Hon Hai group through third-party allotment (hereinafter “the issuance of new shares through third-party allotment”).
The market surrounding electronics industry is becoming severe, with rapid price decline due to the development of digital technology and increasing competition in a global market. We believe the timely action is necessary to tackle these changes in the market.
Looking at the business environment, Hon Hai Precision Industry, the key company of Hon Hai group, saw Sharp’s LCD technology with high reputation, and decided to procure ultimately up to 50% of large-size LCD panels and LCD modules manufactured at the LCD panel plant in Sakai-city, Osaka, Japan. The LCD panel plant will be mutually managed by one company set by partner companies.
In addition, this partnership allows each company to establish a new business model, combining each company’s strength, to launch cost competitive component and products fit to market demand by utilizing Sharp’s potential for the development of one-of-a-kind components and products with Hon Hai group’s mounting technology and cost competitiveness.
Sharp plans to enhance this partnership by broadening the collaboration field, to allocate funds received from Hon Hai group by the issuance of new shares through third-party allotment, to the investment for the new technology introduction, to increase mid-and long- term profitability, and to strengthen competitive edge in the global market.
Overview of Strategic Partnership
1. Stabilize LCD panel plant operation in Sakai and strengthen cost competitiveness by purchasing power of Hon Hai Precision Industry
Hon Hai Precision Industry will procure ultimately up to 50% of LCD panels and LCD modules manufactured by SDP. Both companies will mutually take in part of the management through one company set by partner companies, which enables stable operation of the LCD panel plant in Sakai.
The two companies will take advantage of the economy of scale and material procurement in LCD panel and LCD TV fields, and will further enhance cost competitiveness in the global market.
*Share holding rate of SDP:
Sharp: Approx. 93%
Sony: Approx. 7%
After signing the partnership:
Sharp: Approx. 46.5%
Terry Gou and others including investment corporations: Approx. 46.5%
Sony: Approx. 7%
2. The issuance of new shares to Hon Hai group through third-party allotment
Sharp will issue new shares to Hon Hai group through third-party allotment (the number of new shares to be issued: 121,649,000 shares)
*The issuance of new shares through third-party allotment and share holding rate after the issuance of new shares:
Hon Hai Precision Industry Co., Ltd.: 4.06%
Foxconn Technology Co., Ltd.: 0.65%
Foxconn (FAR EAST) Limited: 2.53%
Q-Run Holdings Limited: 2.64%
[Total of 9.88%]
Source information is from: Issuance of New Shares Through Third-Party Allotment Associated with Business Alliance and Partial Transfer of Shares in Subsidiaries [Sharp Corporation, March 27, 2012] as per the following essential details compiled from that:
Capital Increase Through Third-Party Allotment (no director from Hon Hai is scheduled to be dispatched as of today in association with the Capital and Business Alliance): with issue price of 550 yen per share
Hon Hai Precision Industry Co., Ltd ([also known as Foxconn, http://www.foxconn.com/] represented by chairman: Terry Tai-Ming Gou)
– major shareholder and ratio of shareholding: Terry Tai-Ming Gou 12,02%
– 50,000,000 shares [27,500 million yen = US$ 332.0M]
Foxconn Technology Co., Ltd (represented by president: Lin, Don-Lang)
– [as per Businessweek: engages in the design sales and manufacturing of Mag/Al casing and mechanic parts primarily in Taiwan. It also involves in the design sales and manufacturing thermal modules for O/T, NB, server, and other 3C products. In addition, the company engages in the design sales and assembly of consumer electronic products.]
– major shareholder and ratio of shareholding: Hon Hai Precision Industry Co., Ltd 10,09%
– 8,029,000 shares [4,415,950 thousand yen = US$ 53.3M]
Foxconn (FAR EAST) Limited (represented by directors: Yu Huang, Chiu-Lian, Lee Jin-Ming)
– [as per Annual Report for 2010*: Investment holdings in Mainland China, Europe and North America and Hong Kong electronics manufacturers]
– major shareholder and ratio of shareholding: Hon Hai Precision Industry Co., Ltd 100%
– 31,143,000 shares [17,128,650 thousand yen = US$ 206.8M]
[*for Hon Hai Precision Industry Co., Ltd and subsidiaries consolidated]
Q-Run Holdings Limited (represented by director: Lee Han-Ming)
– [as per Businessweek: through its subsidiaries manufactures and distributes computer thermals and hardware parts]
– Foxconn Technology Co., Ltd 100%
– 32,477,000 shares [17,862,350 thousand yen = US$ 215.6M]
Total: 121,649,000 shares[66,906,950 thousand yen = US$ 807.7M]
Transfer of Shares in a Subsidiary: Sharp Display Products Corporation
Terry Gou (Terry Tai-Ming Gou):
– 1,320,000 shares providing a holding rate of 46.48%
(Sharp Corporation the same 46.48%, Sony Corporation 7.04%)
– Transfer price: 66,000 million yen [US$ 796.8M]
(as per the registered capital: 6,972 million yen [US$ 84.2M])
Sharp and Sony Amend Agreement Regarding Joint Venture to Produce and Sell Large-Sized LCD Panels and Modules [Sharp press release, March 28, 2012]
Sharp Corporation (“Sharp”) and Sony Corporation (“Sony”) announced that they have agreed to further amend the joint venture agreement originally executed by the parties in July 2009, as amended in April 2011, for the establishment and operation of Sharp Display Products Corporation (“SDP“), a joint venture to produce and sell large-sized LCD panels and modules.
Pursuant to the April 2011 amendment, Sharp and Sony discussed possible further contributions by Sony to SDP, but they have agreed that Sony will not make additional capital injections to SDP. The parties have also agreed to set a new time period, up to the end of September 2012, to permit study of the future direction of the joint venture, including with respect to the treatment of the shares that Sony has in SDP (7.04% of all issued shares) and possible purchases of large-sized LCD panels and modules. Under the March 2012 amendment, Sony may require that Sharp acquire all of Sony’s shares in SDP, even before the end of September 2012, upon the occurrence of certain events such as a transfer by Sharp to any third party of some or all of the shares that Sharp has in SDP.
On July 1, 2009, Sharp transferred its LCD panel plant in Sakai City, Osaka Prefecture, to SDP. On December 29, 2009, Sony invested 10 billion yen into SDP in exchange for new shares issued by SDP to Sony (representing 7.04% of the issued shares in SDP) and, as a result, SDP became a joint venture company of Sharp and Sony. Since then, Sharp and Sony have continued discussion about possible further contributions by Sony to SDP.