Hon Hai set to become Apple display supplier Sharp’s biggest shareholder

“Terry Gou, founder of Hon Hai Precision Industry, will show off an advanced LCD panel factory he jointly owns with Sharp to a delegation of fellow Taiwanese on Thursday that has become a symbol of how he may save the Japanese firm from the wreck of Japan’s sinking TV industry,” Tim Kelly reports for Reuters. “Feeble demand that left the $4 billion plant operating well below capacity forced the maker of Aquos LCD TVs to post its worst ever annual loss last business year. But helped by recent orders won by Hon Hai, production at the plant in Sakai, western Japan, has surged, according to sources.”

“Gou, looking to further tap Sharp’s expertise to produce more panels for Apple Inc’s iPhones and consumer electronics, is on the cusp of sealing a deal that will make his company the biggest shareholder of century-old Sharp with at least a 9.9 percent stake,” Kelly reports. “But whether he makes the investment, Gou says, depends on the Japanese firm’s willingness to heed his advice on how to restore profits.”

“Hon Hai, which Gou started four decades ago as a plastic parts maker, is hoping to get the technological know-how of Japan’s leading panel maker to improve operating margins and boost its supply of panels to Apple. For Sharp, the Japanese firm needs backup from Hon Hai to remain viable in the long term, say investors,” Kelly reports. “Sharp and other Japanese TV makers Sony Corp and Panasonic Corp, which ruled the global TV market in the 1980s and 1990s, have been battered by aggressive South Korean rivals Samsung Electronics and LG Electronics.”

Kelly reports, “As the major shareholder in Sharp, which also builds screens for Apple’s iPhone and iPad, Hon Hai will be concerned about the performance of the Japanese firm’s other units, including its money-losing solar-panel business, profitable appliance division and printer unit. Sharp so far has said that to return to health, it will lay off 5,000 workers, its first redundancies in more than 60 years. It may have to cut more, analysts say, if pressure from Gou adds to a similar push from lenders to do more to turn itself around.”

Read more in the full article here.

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  1. There is nothing new in Hon Hai (Foxconn) owning major part of Apple display supplier — they are the key owner of (Chimei) Innolux. But adding Sharp to it makes them stronger.

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