Hon Hai Precision Industry, parent of EMS provider Foxconn Electronics Inc. and a leading supplier to Apple Inc. (Nasdaq: AAPL), is taking a 10 percent stake in Sharp Electronics Corp. in an effort to shore up a source of liquid crystal displays.
Sharp is one of three display makers, in addition to Korea's Samsung and LG, that are licensed to manufacture Apple's new Retina displays. Apple has been unable to meet demand for its new iPad because of a shortage in displays. So far, only Samsung Electronics Co. Ltd. (Korea: SEC) has been able to produce the trademarked displays in volume.
Hon Hai/Foxconn will invest $808 million in Sharp, making it the top shareholder of the Japanese company.
Sharp, like other LCD makers, has been suffering from slowing demand of the displays and lower ASPs. Samsung has spun its LCD business off into a separate unit in order to focus on the development of OLEDs, a new, higher-profit panel technology.
Sharp's new president, Takashi Okuda, told The New York Times:
We needed to take action, as we face a strong yen and a rapidly changing business environment. It’s no longer an option to do everything from development, design, manufacturing, marketing and customer service. It’s more important for us to collaborate with business partners to be competitive in the market.
Sharp, Sony, and Panasonic, Japan’s three main TV makers, expect to lose $17 billion this year, hit by competition from foreign rivals led by Samsung, according to the NYT.
Overall pricing for LCDs stabilized in February, according to market research firm IHS iSuppli. That stabilization means prices fell less rapidly than in prior months.
"The last four months have seen decreases averaging 0.5 percent -- indicating the arrival of stability in a market that saw pricing contract by 3 to 4 percent per month from August to October of 2011 for large-sized panels, defined as those sized 10.x inches and larger," IHS iSuppli reports.