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Sharp accepts Samsung's $111M offer

Posted: 08 Mar 2013 ?? ?Print Version ?Bookmark and Share

Keywords:smartphone? LCD?

Sharp Corporation announced Wednesday that it has agreed to receive capital investment to the tune of about $ 111 million from Samsung Electronics. The investment will not only grant Samsung a 3.08 per cent stake but will also establish the South Korean giant as Sharp's fifth largest shareholder, ahead of Qualcomm, which prior to the offering was the only company in the bunch dominated by financial institutions.

A partnership between the Japanese LCD company and its rival South Korean giant is somewhat unexpected, but the move will be critical for the ailing Sharp to improve its financial health and boost supplies of television and smartphone LCD panels to Samsung.

Japan's economic newspaper Nikkei reported that Sharp, in fact, has been already supplying LCD panels for 32-inch TVs to Samsung from its Kameyama fab. The new financial deal with Samsung could also help Sharp to increase the utilisation of its Kameyama fab since Sharp has seen its fab's capacity utilisation sinking under 50 per cent as a result of Apple's decision to reduce output of the iPhone 5.

Sharp starts production for smartphone LCD panels
Sharp started initial production of 5-inch HD LCD smartphone panels back in October at its Kameyama Mie Plant No. 3, which primarily produces LCD TV panels. At full HD, the 1,080 x 1,920 panels will feature a pixel density of 443 ppi, designed using CG-Silicon technology which was jointly developed by Sharp and Semiconductor Energy Laboratory. Full story here.

It remains unclear how this deal affects or substitutes the yet-to-be-consummated Hon Hai-Sharp deal originally struck a year earlier. Hon Hai agreed last March to acquire a 9.9 per cent stake in Sharp for 550 yen a share, providing the Japanese company with 66.9 billion yen. As the companies renegotiated the deal, Sharp's share price fell to a 38-year low in mid-August to 164 yen. Talks stalled after top executives from both companies met in Osaka at the end of August last year. (See Sharp-Foxconn deal stands in shaky ground .) The two companies, to date, have been unable to come up with a reworked deal, while its deadline for the deal, set on March 26, is only a few weeks away.

Ranked number seven on Sharp's shareholder list, Qualcomm announced back in December that it has agreed to invest around $125 million to cover development and capital costs as the communications technology firm seeks to commercialise MEMS displays. The proposed equity investment will be implemented under Qualcomm subsidiary Pixtronix as it expands efforts in creating MEMS-based displays manufactured via Sharp's LCD production lines. (See Qualcomm invests in Sharp to advance MEMS displays.)

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