Sat, May 05, 2012 - Page 12 News List

Hon Hai-Sharp ties should help Chimei Innolux

WIN-WIN:Hon Hai’s money should rescue the Japanese flat-panel producer from financial difficulty, with tech transfer to Chimei Innolux as the other side of the deal

Staff writer, with CNA

The tie-up between Taiwan-based Hon Hai Group (鴻海集團) and Japan’s Sharp Corp is expected to help Taiwanese flat-panel maker Chimei Innolux Corp (奇美電子), one of Hon Hai’s subsidiaries, obtain technology transfers from the Japanese electronics giant for a production upgrade, according to a report.

The report, released by advisory firm DisplaySearch earlier this week, said Hon Hai will be involved in Sharp’s flat-panel operations through a deal to acquire a stake in the Japanese company, and such a relationship is expected to secure flat-screen technology for Hon Hai’s subsidiary Chimei Innolux.

In late March, Hon Hai, the world’s largest contract electronics maker, announced its acquisition of about an 11 percent stake in Sharp for US$800 million (NT$23.4 billion), which made it the Japanese firm’s largest shareholder.

Under the deal, Hon Hai has also agreed to acquire a 46.5 percent stake in a 10th-generation LCD plant in Sakai, western Japan, for an additional US$800 million.

DisplaySearch said the acquisition is expected to allow Hon Hai to not only own half of the Sharp plant’s production, but also to participate in the Japanese firm’s future technology development, which will help Chimei Innolux upgrade its technology.

Before the deal, Hon Hai and Chimei Innolux had set up a partnership with Sharp, the advisory firm said.

Under the partnership, Hon Hai was serving as a contract maker for the Japanese partner, while through technology licensing, Sharp had transferred ultraviolet-included multi-domain vertical photo alignment technology for LCD screen production to Chimei Innolux.

In addition, Sharp had also provided technological assistance to Chimei Innolux to improve the photo alignment process at the Taiwanese firm’s 7.5 and 8.5-generation plants, DisplaySearch said.

Sharp has started placing orders with Hon Hai for LCD TV assembly, while Chimei Innolux has also begun supplying Sharp with TV flat panels that the Japanese firm does not make, according to DisplaySearch.

It is expected that Hon Hai will expand its TV assembly services for Sharp in light of the acquisition deal, the advisory firm said.

The Taiwanese group is planning to produce 9.5 million LCD TVs this year, 1.5 million of which will be for Sharp and the remaining 8 million units for Sony, the firm added.

For Sharp, the deal with Hon Hai should mean a huge injection of funds that will resolve the finanical problems of the struggling Japanese firm, DisplaySearch said.

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