Foxconn owner to purchase stake in struggling Sharp

Published:  30 Mar at 9 AM

As reported by the BBC, the owner Foxconn, Hon Hai Group, has announced plans to invest 133 billion yen ($1.6 billipn; £1 billion) in electronics maker Sharp. The deal is expected to boost Sharp's LCD sector, which has been experiencing losses.

The tie-in comes as the firm confronts stiff competition from Taiwanese and Chinese companies. Sharp has predicted a net loss of 290 billion yen ($3.8 billion; £2.2 billion) for the financial year ending 31 March.

Sharp releases a statement last Tuesday explaining that the electronics industry market was becoming “severe”, saying that timely action was needed to tackle the changes in the market.
The firm plans to sell off a 9.9 percent stake to Apple supplier Hon Hai Group for 66.9 billion yen. Hon Hai also plans to purchase a 46.5 percent share in Sharp Display Products, which will be a joint venture between Sony and Sharp for 66 billion yen.

Analysts said the deal would benefit Sharp, as it has been struggling with lower demand for its LCD technology. Kazuhara Miura at SMBC Nikko Securities called it a positive step for Sharp, explaining it would allow the firm to share the deficit at the Sakai plant.

Sharp also said in its February forecast that larger-than-expected price drops in LCD colour TVs and solar cells, as well as the overall global financial slowdown, were putting muc pressure on earnings.