“Foxconn’s purchase of a 66% stake in Sharp for the reduced price of $3.5 billion is questionable on its own merits,” Mark Hibben writes for Seeking Alpha. “Foxconn is getting LCD screen production capacity that is rapidly becoming obsolete as the industry transitions to OLED screens.”
“The deal only makes sense from Apple’s perspective,” Hibben writes. “Apple needed to prevent an interruption in the supply of LCD screens for which it is dependent on Sharp.”
“The fundamental question is, why go through the trouble? Everyone knows that LCD screens are being supplanted by active matrix organic LED (AMOLED) screens for mobile devices. The two most important AMOLED screen makers are Samsung Display and LG Display,” Hibben writes. “Apple is in my view using Foxconn as a proxy to assure an uninterrupted supply of LCD screens. As such, it probably had to incentivize Foxconn to take on the burden of Sharp. The incentives that Apple could offer Foxconn are many and varied, but probably all have the characteristic of keeping Apple’s involvement off the books.”
Read more in the full article – recommended – here.
MacDailyNews Take: Very interesting and probably contains more than a kernel of the truth.
SEE ALSO:
Apple supplier Foxconn agrees to buy Sharp after slashing original offer – March 30, 2016
Sharp Corp. liabilities list covered worst-case scenarios; takeover talks extended – February 29, 2016
Why Foxconn’s multi-billion-dollar deal for Sharp is dead in the water – February 25, 2016
Foxconn’s $5.1 billion bid for Sharp could be good for Apple, too – February 25, 2016
Apple supplier Sharp accepts Hon Hai’s $6.2 billion takeover offer; Hon Hai says deal on hold – February 25, 2016
Foxconn fast-tracks $5.5 billion Sharp takeover bid – February 4, 2016
State-backed Japanese fund in race with Foxconn to save Sharp – January 21, 2016
Hon Hai considering $1.7 billion stake in Sharp LCD business; to ask Apple to invest a ‘few hundred million’ – September 28, 2015
Hon Hai offers to buy Sharp’s LCD business, wants Apple funds – September 21, 2015
Apple suppliers Sharp, Foxconn in talks for LCD joint venture – August 24, 2015
Beleaguered Sharp’s problems present an opportunity for mighty Apple – May 15, 2015
Apple display supplier Sharp warns on ability to stay afloat after $1.9 billion loss – May 14, 2015
Apple iPhone display supplier Sharp boosts operating profit – August 1, 2014
Sharp dedicates entire LCD plant to Apple – June 30, 2014
Hon Hai in no hurry to finalize Sharp deal – June 26, 2013
Sharp to replace chairman, president after losses – May 14, 2013
[Thanks to MacDailyNews Reader “Dan K.” for the heads up.]
I hear Foxconn may be buying an old Intel fab to keep the chips that Apples uses in production.
More likely a pixel of truth.
A very myopic article I must say. LCDs are not the only assets Sharps has. They also own many patents. Apple and Sharp have co-vested in a number of patented technologies, not the least of which is a blue pico laser that has the potential to disrupt future display technologies if they can ever get production costs down. So yes, Apple does have good cause to keep their hands in Sharp’s pie as it changes hands.
“Everyone knows that LCD screens are being supplanted by active matrix organic LED (AMOLED) screens for mobile devices.”
Apparently Apple doesn’t ‘know’ that. Everyone is skating to where the puck is, should Apple charge on over there too? There are far to many people who ‘know’ what to do than Apple does. I am investing heavily in their non-existent companies with Monopoly money right now.