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Sharp under pressure to find LCD partner

Wed 28 Oct 2015

The pressure is on for Sharp to find a partner to invest in its LCD business by March 2016.

The main banks for Sharp Corporation have told the company that it must find a buyer for all or even part of its LCD (Liquid Crystal Display Televisions) business in the next few months. Sharp has already had two huge bailout packages including a $17 billion deal in May. Despite this, Sharp has made a loss, with the result being that it cannot invest enough to keep its screen business competitive.

One of the principal executives has commented that because the LCD sector is such a volatile business that requires a constant stream of investment, the banks are insisting that Sharp decides on an investment partner by the end of 2015 – or by the end of the fiscal year in March 2016 at the very latest. The banks are concerned that without proof of potential investment, the smaller lenders will not refinance the loans that are due to be paid back by next March: in which case, the main banks will have to take on a greater burden of paying back the money.

However, there have been rumours of potential investors. A likely candidate is Taiwan’s Hon Hai Precision Industry Co. Going by the trade name of Foxconn, Hon Hai has been rumoured to be interested in buying either part or all of Sharp’s LCD unit. It already owns a 37.6% stake in Sharp’s most advanced LCD plant.

Research firm IHS Technology’s senior director Hiroshi Hayase said that Sharp’s expertise in high-end LCD panels is exactly what Hon Hai wants: “Experience of more than 30 years in LCDs is something you don’t easily catch up with.”

But such a deal with Hon Hai could face opposition from inside the Japanese government, cautious of a potential threat to Japan Display. Sources have claimed that a move by the state-backed fund Innovation Network Corp of Japan to invest in Sharp or merge its LCD unit with Japan Display could present anti-trust concerns, especially in China.

However, at the time of writing, no deals of investment have been confirmed by the rumoured parties.

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