Taiwan’s Hon Hai Group invests in SHARP


Crunch time? – reviving Japan’s huge electrical/electronics sector

SHARP fighting for survival

SHARP (6753) last month forecast a record YEN 290 Billion (US$ 3.5 Billion) loss for this financial year – more than 1/2 of SHARP’s market cap, and SHARP’s new Sakai factory is reported to work at 1/2 capacity.

Taiwan’s Hon Hai Group (which includes Foxconn, which is known to assemble Apple’s iPhones and iPads), and founder Terry Gou invest about YEN 133 Billion (about US$ 1.6 Billion in SHARP:

  1. Hon Hai Group will invest YEN 66.9 Billion in newly issues SHARP-shares corresponding to a 9.9% holding, and will become SHARP’s largest share holder
  2. Hon Hai’s Chairman Terry Gou and related investment companies will buy 46.5% of SHARP Display Products Corporation for YEN 66 Billion reducing SHARP’s holding from 93% to 46.5% (note that SONY preferred not to increase its holding in SHARP Display Products Corporation, which operates the Sakai factory)
    click below to watch video clip (initial plan for the interview was to discuss the ELPIDA bankruptcy, but at the last minute we switched the interview to the Hon Hai investments in SHARP, because of the potentially much bigger impact on Japan)

There is a wide range of implications

  • Clearly the business models which have sustained Japan’s huge electrical sector for several decades have reached end-of-live, and restructuring as well as much more opening to the outside, non-Japanese world are becoming more and more urgent. Much of our Post-Galapagos Working Group efforts last year were devoted to this urgent need.
  • SHARP’s financial problems may not be solved yet, and further investments by Hon Hai or others might well be on the horizon
  • APPLE – although not directly involved in the transaction – is the center of power. With the investment Hon Hai may hope, that a combination of Hon Hai and SHARP may become a stronger supplier to APPLE than each company alone. SHARP has been reported to use Hon Hai’s investment to increase production of LCD displays for smart phones, and tablets.
  • Comparing market capitalization, it’s clear who the stronger partner is:
    • SHARP = US$ 6.6 Billion market cap
    • Hon Hai = US$ 39 Billion market cap

For data and detailed analysis download our report on:

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