Qualcomm set to buy 5% stake in Sharp, reports say

AFP, TOKYO

Wed, Dec 05, 2012 - Page 15

Chipmaker Qualcomm Inc is set to buy about 5 percent of Sharp Corp, reports said yesterday, as the cash-strapped Japanese electronics giant looks for a capital injection to repair its balance sheet.

The ¥10 billion (US$122 million) investment by US-based Qualcomm comes as Sharp, mired in heavy losses, has also reportedly been talking with other US technology giants, including Intel Corp and Dell Inc, about a possible investment.

The Qualcomm deal would see the pair jointly develop energy-efficient LCD panels for smartphones using the Japanese firm’s technology, with the US company getting new Sharp shares equal to about 5 percent of its current market value, Jiji Press news agency reported.

The agreement calls for Qualcomm to invest about ¥5 billion in Sharp by the end of the year, with the other half invested as the joint venture progresses, the Nikkei Shimbun said.

News of the deal gave Sharp shares a boost in Tokyo where the embattled stock rose 1.2 percent to ¥174.

In a short statement yesterday morning, Sharp said: “Today’s reports about a US chipmaker’s investment in our company are not what we have announced.”

Sharp has suffered a series of credit rating downgrades and warned it expects to lose about US$5.6 billion in the fiscal year to March next year.

The Osaka-based maker of Aquos -brand electronics has announced thousands of job cuts while cutting wages for employees — from the factory floor to the executive boardroom — and selling real-estate to shore up its balance sheet.

Earlier this year, Sharp said it had reached a capital injection deal worth about US$800 million with Taiwan’s Hon Hai Precision Industry Co (鴻海精密), which makes Apple gadgets in China, but the deal stalled as Sharp’s share price nosedived.