Did Tim Cook just get played? Samsung’s stake in Sharp a threat to Apple

“The recent investment in Sharp by Samsung can pose a serious threat to Apple in the long run,” Ashit Gulati writes for The Motley Fool. “Apple is considering to trim down its dependence on Samsung for supplies, as Samsung is also one its prime competitors. However, Samsung’s investment (3% stake) in Sharp that also supplies display panels to Apple, will force Apple to re-think the entire supply chain strategy.”

“Samsung’s stake in Sharp will enable it a stable access to display panels. Apple being the largest player in the industry controls a tight ship over its suppliers, however having to struggle with Samsung over production capacity and volume will relinquish its hold,” Gulati writes. “As the smart phone industry grows and diversifies with new entrants, existing players will strive hard to diversify the supply chain to sustain competitive advantage. Samsung’s growing smart phone business and the recently announced backward integration will force Apple to re-strategize, in order to avoid losing further control over its vendors.”

Gulati writes, ” A 3% stake is not very threatening; however it now pushes Apple to think out of the box to establish new supply chain partnerships for a steady and reliable access of display panels.”

Read more in the full article here.

MacDailyNews Take: Wait, how did we go from “serious threat” to “not very threatening” in seven sentences?

Related articles:
Samsung Electronics buys 3% share in Apple-supplier Sharp for $112 million – March 6, 2013
Samsung Electronics may buy stake in Apple-supplier Sharp – March 5, 2013
Analyst: Apple a ‘prime candidate’ to adopt Sharp’s IGZO display technology in future devices – January 8, 2013
Hon Hai’s Terry Gou says investment talks in Sharp still on – December 5, 2012
Qualcomm to invest up to $120 million in Sharp; help with development of IGZO display technology – December 4, 2012
Sharp boosts IGZO display output; shares soar – October 22, 2012
Sharp tips highly efficient ‘iPad min’ IGZO screen tech – October 17, 2012
Is Sharp exhibiting high-res iPad mini IGZO displays? – October 2, 2012
Sharp’s IGZO display production issues forced Apple settle on Plan B for new iPad, says expert – May 7, 2012
Analyst: Retina display production issues persist for Apple iPad – April 23, 2012
Sharp announces production of world’s first IGZO LCD Panels – April 13, 2012
After using Apple’s new iPad with Retina display, old iPad screens become absolutely unacceptable – March 30, 2012
Apple ‘iTV’ beckons as jackpot in Hon Hai’s Sharp gamble – March 28, 2012
Foxconn-Sharp partnership likely targeting Apple orders – March 28, 2012
Taiwan Apple supplier Hon Hai becomes Sharp’s largest shareholder with 10% stake – March 28, 2012
Apple to unveil smaller 7.85-inch iPad this year, says anonymous Samsung official – March 13, 2012
Wow, Sharp sure is ramping up IGZO display production for some reason – March 2, 2012
Apple iTV unlikely to launch in 2012 due to IGZO display panel manufacturing concerns, sources say – February 3, 2012

54 Comments

  1. All I see is pressure being applied towards Apple in an effort to force them to divulge their plans. A 3% stake is chump change and merely a way to make sure Scamsung stays near enough to Apple so they can continue to copy/steal. “Keep your friends close but keep your enemies closer”.
    The same can be said by all the downward pressure from the market. Everyone knows Apple is on the cusp of some new product/service/innovation but what exactly is anyones guess. All I see is pressure to force Apple to divulge their plans, while Scamsung makes sure they stay just close enough to look over their shoulders…

  2. A couple of years ago, Apple announced they put over a billion into Sharp to build a plant for producing retina displays for iphone. What is the situation with that now, I wonder?

  3. …..why would Sharp take investment from Samdung who is their biggest competitor? Isn’t that kind of like RIMM taking investment from Samdung? Yes, Sharp is between a rock and a hard place, but I don’t think 3% is anything to worry about.

    From Sharps point of view, I would say that 3% is nothing that can force them to do anything. What power does 3% give Samdung? Nothing!

    From Samdung’s point of view, I would say…….hmm I really don’t see what the hell Samdung gets from this.

      1. So you are saying that Sharp agrees to report all Apple proceedings to Samsung for 3%? Or are you saying that 3% gets a Samdung friendly board member on Sharp’s board?

  4. The greatest threat is if that three percent gives them access to apple’s strategy. This might give them. A Eric the mole type of inside look to future products.

    1. Ok, genius, I’ll bite: Exactly how will a 3% interest in a Japanese company by a Korean company give the latter insight into the strategy of an American company. Your answer should be based on the real world, and real law, and not something you saw in a movie or tv show.

      1. Knowing the the type of products Apple is asking Sharp to build: screen type, size, number etc will give them a heads up on what apple is planning.

        I don’t know what exactly sharp builds but imagine if apple ordered a bunch of 5 inch phone screens…
        they’ll instantly know apple is going for bigger phones.
        or if they are ordering iWatch components…

        note too that it takes months for production to start a and ramp up (Foxconn for example took a long time to get the laser cutters together to build the first unibody macbooks) so Samsung gets a nice long heads up (and adjust their strategy accordingly).

        1. So much for that corporate firewall… I mean, really?????
          Any amount of investment allows them to sit in on quarterly conference calls. As a stock holder (even with only 1 share) a person can easily sit in on that call. Fortunately for Apple they NEVER tip off the investors by announcing future product plans on those quarterly calls, other companies do, though…

          1. I didn’t write about conference calls etc.

            I’m saying if apple gives sharp “confidential’ orders to build something, having 3% will give them a heads up.

            from what I gather the 3% isnt what you’re suggesting like someone buying 3% of the share on the open market. It’s more like a joint venture thing which allows them a lot more access than a general shareholder who has to get info just from ‘conference’ calls.

            Forbes:
            “Samsung’s modest $111 million investment in Sharp, announced on Wednesday, will thus not only give it access to the Japanese company’s technology it will turn up the heat on its own display unit … it will give Samsung a broader supplier base, access to Sharp’s low-cost thin-screen technology, and a foot in the door at one of Apple Inc’s key Asian display suppliers.”

            They’re going to learn a heck a lot more and much much faster than waiting for conference calls.

            1. @jeff

              looking at your post again and my reply I would like to say I don’t mean to be argumentive, perhaps I did not understand what you are getting at.

              looking at your other posts I sort of agree with some of what you are saying.

            2. @ donkey
              No problem, I should have clarified that I ws COMPLETELY agreeing with you and just adding a bit of “how it is done” to what you were saying. Quarterly calls report revenue and where it is derived from. It would be simple enough to deduce Apple’s plans from extra revenue derived from an increase in sales for, say, 5″ screens, or whatnot.

      2. More likely would be that Scamding see’s a potential innovation with regard to LCD panels/production tech from Sharp and they want access to the knowledge. Real enough for you now? Corporate espionage is real, anyone who owns a business with an advantage over their competitors will attest to this fact.

        1. Actually, none of you answered my question, altho you are certainly celebrating with the back-pats. The answer is this: It doesn’t. Simply owning shares in a company entitles you to absolutely no more information that must be supplied to the securities regulatory agency in the given country. And that is basically available to everyone. By buying 3% of Sharp, Samsung is not entitled to any more information that it would have gotten by analysis of public records or by “industrial espionage.” In other words, this is essentially a non-story (the point of MDN’s take).

  5. No No. Sharp has no love for Samsung or Korea.
    Sharp will mine data and future Samsung design maps for their best customer Apple.
    Don’t expect Samsung to get the top tier technology !

  6. Owning shares does not give anyone a right to know the inner secrets of a company. I own AAPL and don’t know if iWatch is coming or not blow the hell is Samsung going to know what Apple is doing if Sharp’s agreements with Apple are secret? Sharp is struggling and needs investment. Apple’s problem is bad press, not Samsung buying 3% of Sharp. Apple has released nothing splashy in months. No Feb or Mar splashy shows, probably a good thing since Tim Cook is not a showman. But Apple needs to get something out there that is big soon. Samsung is announcing the new Galaxy this week. Where is Apple? Ives is working on the new HI for the software. IPhone is yesterday’s news. Mac is selling. We need something now

    1. from the press reports the 3% is NOT just ‘owning’ shares (like a common shareholder) but buying into the company more akin to a partnership. Samsung wants Sharp to share info.

      Forbes:
      “Samsung’s modest $111 million investment in Sharp, announced on Wednesday, will thus not only give it access to the Japanese company’s technology it will turn up the heat on its own display unit … it will give Samsung a broader supplier base, access to Sharp’s low-cost thin-screen technology, and a foot in the door at one of Apple Inc’s key Asian display suppliers.”

      when you have samsung execs walking around sharp ‘sharing’ there is no doubt they will learn more about sharps business.

      Board members on Apple’s board are also shareholders but they know a heck a lot more about apples plans than the common shareholder. Not all shareholders are the same.

      —-
      I agreet though about the rest of your post that apple needs to up its marketing etc.

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