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Qualcomm invests in Sharp displays

Takes initial 2.6% stake in return for enhanced collaboration on IGZO and MEMS display technologies


Published: 4 December, 2012

READ MORE: M&A | Qualcomm | Display

Several of the world's chip majors have been circling around Sharp, and the chance to gain a low cost entry to its advanced display technologies at a time when the Japanese giant has warned of the danger of bankruptcy. Though Intel was considered the frontrunner to take a stake - and may still do so - Qualcomm has secured the initial prize, announcing an equity investment and an expanded technology agreement centered on Sharp's IGZO technology.

Qualcomm takes a keen interest in mobile display advances as it seeks to optimize its chips for the entire user experience. Although its own innovative MEMS-based display, Mirasol, failed to succeed as a commercial business, its Pixtronix subsidiary continues with developments in the touchscreen and user interface areas.

This unit will now broaden its 18-month pact with Sharp's display operation to "develop and commercialize high quality color, low power MEMS displays incorporating IGZO." Sharp has pioneered IGZO (Indium Gallium Zinc Oxide) technology, which supports very slim displays using existing LCD manufacturing processes. The goal of the joint effort, according to Qualcomm's statement, is to accelerate commercialization of Pixtronix's low power MEMS displays, using IGZO.

The equity investment, which will make the US chip designer a minority shareholder, will take place in stages and the completion of the transaction is subject to certain contingencies. Sharp will issue new shares to Qualcomm at development milestones in the venture. According to Bloomberg, Sharp plans to detail the financial terms later today, but they will include the sale of ¥5bn ($61m) in new shares this year, which would amount to a 2.6% stake based on yesterday's market value of ¥191bn. It could then invest the same amount again subject to successful outcomes.

Earlier this year, Sharp had agreed that Taiwanese manufacturer Hon Hai/Foxconn would take a stake in return for a broad cooperation on display production, but the deal fell through when Sharp's value slumped. Since then, various rescue routes have been mooted for the Japanese firm, including a revival of the Foxconn agreement under revised terms, or investment from Intel and/or Dell.

"As one of the leading electronics companies in the world, Sharp has an established industry brand and is a recognized leader in the development and commercialization of new innovative display technologies," Derek Aberle, group president of Qualcomm, said in a statement. Sharp said the incorporation of Pixtronix's MEMS technology would make its small and medium screens more commercially attractive in a shorter timeframe, improving power consumption levels. The resulting products will be made in Sharp's LCD panel plant in Yonago, Japan.

Qualcomm gains yet another influential position in the innovation chain for mobile devices, boosting its revenue streams, IPR business and ability to shape the next generation user experience.

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