Fri, May 25, 2012 - Page 11 News List

Hon Hai, Sharp in talks to build China LCD fab

EXPANDING VENTURE:Sharp is also purchasing all of Sony’s 7.04 percent stake in Sharp Display Products and selling part of the stake in the venture to Hon Hai

Bloomberg and AP, TOKYO

Hon Hai Precision Industry Co (鴻海精密), manufacturer of Apple Inc iPads and Hewlett-Packard Co computers, said it is in talks with Japan’s Sharp Corp to build a display panel factory in China’s Sichuan Province.

“We are examining the possibility of building a factory with Sharp in Chengdu to make LCDs,” Simon Hsing (邢治平), spokesman for Taipei-based Hon Hai, said yesterday. “We don’t have any firm plans yet.”

Both companies will invest in the factory with Osaka-based Sharp receiving “tens of billions of yen” in license fees from Hon Hai, Japan’s Nikkei Shimbun newspaper reported yesterday.

Sharp shares jumped 7.1 percent, the most since March 28, to close at ¥395 in Tokyo after the Nikkei report.

Hon Hai dropped 1.95 percent to NT$85.30 in Taipei trading.

“This is good news for Sharp,” Hideki Yasuda, an analyst at Ace Securities Co in Tokyo, said of the Nikkei report. “After a huge loss last fiscal year, it is seeking to make investments with limited risk.”

Sharp will also buy out Sony Corp’s 7.04 percent stake in their Sharp Display Products Corp venture, the two Japanese companies said after the close of trading.

Sharp, struggling to recover from its worst loss in a century, said on March 27 it would sell a stake in itself and in the display unit to Hon Hai, its affiliates and founder Terry Gou (郭台銘) for ¥133 billion (US$1.7 billion).

The company posted a ¥376 billion loss for the year ended on March 31, the worst since it was founded in 1912, amid falling TV prices, a strong yen that erodes the value of overseas sales and competition from South Korea’s Samsung Electronics Co and LG Electronics Inc.

Sony said yesterday it would sell back all the stake it has held in Sharp Display Products since 2009. Sony will not lose any money as it will receive ¥10 billion, the same as it paid for shares in the Sharp subsidiary, which produces panels in Sakai, Japan.

Tokyo-based Sony, which racked up a record annual loss of ¥457 billion for the fiscal year ended in March, recently also ended its joint venture with Samsung Electronics Co to produce flat panels.

The decision to get out of panel-making comes as Sony seeks a turnaround under President Kazuo Hirai, appointed in February.

Sony officials say the company will simply start buying panels from manufacturers at good prices, and focus on Sony’s own imaging and other technology to differentiate its TVs from rivals.

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