Ailing Japanese electronics company Sharp says it has reached a partnership deal with U.S. chipmaker, Qualcomm, which will invest up to 9.9 billion yen (US$120 million) to jointly develop display panels.
As part of the agreement, Sharp will issue new shares to Qualcomm and partner Qualcomm-subsidiary, Pixtronix, to develop the latter's low-power MEMS (Micro Electro Mechanical Systems) displays using Sharp's IGZO (Indium Gallium Zinc Oxide) technology, according to separate statements Tuesday from Sharp and Qualcomm.
Sharp said it would accept Qualcomm's financial offer in equity investment to pursue this joint development. The capital will be used for the development of the MEMS display as well as necessary capital investments to accelerate commercialization of the technology.
The exact percentage of shares was not disclosed in the statement, but Qualcomm said its investment would make it a minority shareholder of Sharp. The financial injection will take place in stages and consummation of the transaction is subject to certain contingencies, it added.
"Expanding our existing relationship with Sharp to jointly commercialize new MEMS display technologies will help both companies realize their shared goal of driving high performance and lower power displays for a variety of devices, including smartphones and tablets," said Derek Aberle, executive vice president and group president of Qualcomm.
A day before the announcement, Japan's Nikkei reported the two companies agreed to jointly develop an energy-efficient LCD panel for smartphones, using Sharp's proprietary IGZO technology. In exchange, the Japanese company will receive around 5 billion yen (US$61 million) by the end of the year through a private placement of shares, and an additional 5 billion yen once sufficient progress is made.
Sharp is bracing itself for a second consecutive annual net loss of more than 300 billion yen (US$3.65 billion) for the year ending March, and partnering Qualcomm is aimed at boosting its LCD panel business, Nikkei reported.
The new partnership comes as Sharp's relationship with another major partner--also known by its trading name, Foxconn--has seen several bumps including Sharp's . Hon Hai's for a 10 percent had been delayed due to the latter's steadily-declining share price which .