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Samsung could invest in Sharp's rescue

Ailing Japanese electronics firm could see Apple, Qualcomm and Samsung all lined up behind its IGZO display technology


Published: 6 March, 2013

READ MORE: M&A | Japan | Display

The long saga of Sharp's future ownership drags on, but is interesting for the industry at large because of the power players which may be involved in its bail-out. Qualcomm has already taken a stake, and other participants may include Intel, Apple and now Samsung - all companies which need the kind of cutting edge display technology Sharp develops. That could raise the interesting prospect of arch-rivals Apple and Samsung both holding stakes in the same display maker.

Apple has supported Sharp in various ways, reported to include financial injections and guaranteed orders, as it seeks to foster a counterweight to Samsung in its supply chain for RetinaDisplay. Having such a key competitive technology manufactured by its smartphone nemesis increasingly sits uneasily with the iPhone maker, and with Sharp, it can have far greater influence on R&D and manufacturing directions.

The latest twist in the story may, then, displease Apple, since Bloomberg reports that Samsung itself now wants a stake in its Japanese display rival. Apparently, the Korean giant is in talks to invest about ¥10bn ($107m) in Sharp, and sources said a deal could be announced as early as this week.

Sharp has been struggling for two years amid rising competition and a slump in its TV business, reporting a 16% year-on-year drop in sales in the six months to September 30 2012, and forecasting a record loss for its fiscal year to the end of March.

But it still has considerable advantages in display technology, including its pioneering IGZO platform. This attracted an investment of up to $120m from Qualcomm in December 2012, which provided welcome relief after an earlier deal with Hon Hai/Foxconn had fallen through because of the plummeting value of Sharp. The Qualcomm alliance includes an 18-month pact to "develop and commercialize high quality color, low power MEMS displays incorporating IGZO", advancing Qualcomm's long standing interest in MEMS screens. Sharp has pioneered IGZO (Indium Gallium Zinc Oxide) technology, which supports very slim displays using existing LCD manufacturing processes.

This may also have caught Samsung's eye as it races to maintain its leadership in touchscreens, and particularly its dominance of the AMOLED sector. Like Qualcomm's $120m, its own $107m would be a drop in the ocean of cash needed to turn Sharp around, but it will increase confidence, as well as creating some interesting dynamics in the increasingly competitive world of touchscreen displays.

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