Foxconn, Apple consider investment in Sharp LCD display business

Foxconn has proposed the buyout, which would give Sharp the chance to offload a failing unit.

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Apple
Foxconn may acquire Sharp's LCD business as the manufacturer moves into electronics.

As reported by Asian publication Nikkei on Monday, manufacturer Foxconn, also known as Hon Hai, is considering the purchase of Sharp's liquid crystal display (LCD) business. According to sources familiar with the matter, the Taiwanese manufacturer and Sharp have been in talks since last summer, and would involve a majority stake investment by Foxconn -- together with investment by Apple.

In addition, Foxconn hopes to secure the Japanese electronic giant's 38 percent stake in Sakai Display Products. Founded in 2009, SDP is a joint venture run by Sharp and SIO International Holdings Limited, an investment firm fully owned by Foxconn chairman Terry Gou. The company develops LCD panels suitable for large screens.

If the deal goes through, Sharp will have the opportunity to recoup and potentially stabilise financially. The electronics giant has struggled with the books in recent times, and as noted by Nikkei, the LCD unit managed an operating profit of 30.1 billion yen in fiscal 2014. However, in the April-June quarter profits slide, which resulted in an operating loss of 13.7 billion yen.

The buyout could also ensure Sharp could keep its 4,000 Japanese staff.

When it comes to the other potential investor, Apple's stake could help ensure the survival of the company, as the iPad and iPhone maker has already supplied $987 million to shift Sharp away from HDTV panels to smartphone displays.

If Apple invests further, the company could end up with operational control, as the iPad and iPhone maker is already a majority Sharp LCD display stakeholder. In turn, Apple's LCD display supply chain will therefore not be broken due to Sharp's troubles.

In July, Chinese manufacturer Hisense snapped up Sharp America's television business in a deal worth $24 million.

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