Foxconn seals $3.5b Sharp takeover amid doubts of Japanese firm’s turnaround prospects

Workers stand at the gate of a Foxconn factory in the township of Longhua in Shenzhen, Guangdong province in this May 26, 2010 file photo. REUTERS/Stringer

Foxconn and Sharp Corp on Saturday formally signed a long-awaited deal that would see the Taiwan firm take control of the Japanese display maker, as executives sought to dispel lingering doubts over whether Sharp can turn around its ebbing fortunes.

At a packed news conference following the signing of the $3.5 billion deal, Foxconn CEO Terry Gou ducked questions about how – and when – Sharp would become profitable again, but expressed confidence in the Japanese company’s ability to bounce back with its highly regarded technology.

Gou pointed to Sharp’s proprietary know-how to mass-produce the advanced IGZO (indium gallium zinc oxide) display technology as a standout, calling it superior to the popular OLED (organic light-emitting diode) technology. IGZO technology is used in products such as Apple Inc’s iPad.

“Everybody is saying OLED,” Gou said at the event held at Foxconn and Sharp’s jointly owned liquid crystal display factory in Sakai, western Japan. “If I was an engineer, I would choose IGZO,” he said, noting that they were more energy-efficient than OLEDs.

Gou said he expected IGZO technology to be used in 60 percent of Sharp’s displays in future, against 40 percent for OLEDs.

Nonetheless, turning around a company saddled with losses after two bank bailouts would not be easy and would require Foxconn to work “very hard,” Gou conceded.

“I’m not going to sugar-coat the challenges,” he said. “But I have a clear roadmap in my heart,” the Foxconn chief added, suggesting that a detailed turnaround plan for Sharp is far from finalised.

Gou said the management had ambitious plans for Sharp to be a key player in next-generation consumer products, including the Internet of Things and “smart” home appliances.

“If we cannot drive changes in Sharp our global competitors will eat us alive.”

Gou said he would try to retain all the jobs at Sharp, though he noted that Foxconn laid off 3-5 percent of its low-performing employees every year.

Foxconn, formally known as Hon Hai Precision Industry Co, agreed to take a two-thirds stake in Sharp at a big discount to its original offer this week, after wrangling over potential liabilities that sowed more doubts over whether the two companies can work together to spark a revival in the Japanese firm.

The deal provides cash-strapped Sharp with funds that the Japanese company said would be used in large part to start mass-producing OLED screens, which Apple is expected to adopt for its future iPhones. Sharp is playing catch-up with Korean rivals in OLED panels.

(Reuters)

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.