Shares in Japan’s embattled electronics maker Sharp rocketed yesterday following reports that the company may get a cash injection of hundreds of millions of dollars from chip giant Intel.
Sharp closed up 7.23 percent at ￥163 on the Tokyo Stock Exchange after briefly surging 10.5 percent.
The Asahi Shimbun said Sharp and Intel were close to agreeing on a ￥30 billion (US$377 million) to ￥40 billion injection.
The Yomiuri Shimbun said Intel, which has joined hands with Sharp to develop digital products equipped with its microprocessors, might purchase ￥30 billion of Sharp bonds that could be converted into shares. The two firms aim to reach an accord by the end of the month, the Yomiuri said, while adding the sum could be lower.
An investment of ￥30 billion could give the US company a potential equity stake of more than 17 percent, based on Sharp’s market capitalization of ￥168.8 billion at the close on Tuesday.
The reports said Sharp was also looking for investment from other US companies, including telecoms group Qualcomm.
Jiji Press news agency said Sharp would get a combined ￥24 billion from Intel and Qualcomm.
An expected capital injection from Hon Hai Precision Industry (鴻海), which makes Apple gadgets in China, has stalled, but Sharp will continue talks with the company, the reports said.
Sharp would not confirm the reports, but they were “an obvious positive for Sharp,” said Toshiyuki Kanayama, market analyst at Monex.
“Sharp may really be in talks with Intel and Qualcomm, or it may merely be posturing in order to secure better terms with Hon Hai for its pre-existing capital arrangement,” he told Dow Jones Newswires. “Of course, Sharp might be eyeing a shift away from Hon Hai altogether. It’s difficult to tell at this preliminary stage, but Sharp’s tactical situation looks better with more potential suitors.”
Sharp has warned it will book a US$5.6 billion net loss for the year to March.