Tomas Chlebek Sharp, the Japanese display maker, issued a statement this morning accepting an offer from Foxconn, Apple's main manufacturing partner, to buy the company. Not long after, however, Foxconn delayed the final signing of the contract, as it is said to have received an unspecified "key document" from Sharp providing the buyer with information that was important to clarify before the purchase. Foxconn now hopes that the situation will be clarified soon and the acquisition can be confirmed on its side.
Sharp's decision is the result of a two-day meeting of the company's management that began on Wednesday. It decided between Foxconn's offer of 700 billion Japanese yen (152,6 billion crowns) and an investment of 300 billion Japanese yen (65,4 billion crowns) by the Innovation Network Corp of Japan, a Japanese state-sponsored corporate organization. Sharp decided in favor of Foxconn, which, if the acquisition is confirmed, will get a two-thirds stake in the company in the form of new shares for approximately 108,5 billion crowns.
Foxconn first showed interest in buying Sharp back in 2012, but negotiations failed. Sharp was then on the verge of bankruptcy and since then has been struggling with huge debts and has already gone through two so-called bailouts, external financial rescues before bankruptcy. Negotiations on the purchase or investment in Sharp were again fully manifested this year in January and at the beginning of February, Sharp was leaning towards Foxconn's offer.
If the acquisition goes through, it will be very significant not only for Foxconn, Sharp and Apple, but also for the entire technology sector. It would be the largest acquisition of a Japanese technology company by a foreign company. Until now, Japan has tried to keep its technology companies entirely national, partly because of fears of undermining the country's status as a major technological innovator and partly because of a corporate culture there that does not like to share its practices with others. The purchase of a giant like Sharp by a foreign firm (Foxconn is based in China) would mean the possible opening of Japan's technology sector to the world.
As for the significance of the acquisition to Foxconn and Apple, it mainly concerns Foxconn as a manufacturer and seller and a major provider of components and manufacturing power to Apple. “Sharp is strong in research and development, while Hon Hai (another name for Foxconn, editor's note) knows how to offer products to customers like Apple, and also has manufacturing knowledge. Together, they can gain a stronger market position," said Yukihiko Nakata, a technology professor and former Sharp employee.
However, there is still a danger that Sharp will not succeed even under Foxconn's dominance. The reason for these concerns is not only Sharp's inability to improve its economic situation even after two bailouts, as evidenced by the reported loss of $918 million (22,5 billion crowns) for the period between April and December of last year, which was even higher, at the beginning of this month. than expected.
Although Sharp was not able to use its display technologies effectively on its own, Foxconn could use them very well, as well as the company's brand itself. It is trying to gain more prestige not primarily as a supplier, but also as a manufacturer of important and high-quality components. It would thus have the potential, among other things, to establish even closer cooperation with Apple. This is ensured by the assembly of products and the production of less important components mainly for the iPhone.
At the same time, the most expensive components of iPhones are by far the displays. With Sharp's help, Foxconn could offer Apple these essential components not only cheaper, but also as a full-fledged partner. Currently, LG is the main supplier of displays for Apple, and Samsung is to join it, i.e. two competitors of the Cupertino company.
In addition, there is still speculation that Apple could start using OLED displays in iPhones from 2018 (compared to the current LCD). Foxconn could therefore invest in their development through Sharp. He has previously stated that he wants to become a global supplier of innovative displays with this technology, which can make displays thinner, lighter and more flexible than LCD.
