Foxconn pushing Sharp to spin off LCD arm

Taiwan's Hon Hai Precision Industry, also known by its trading name Foxconn, has asked beleaguered Japanese electronics company Sharp to turn its small and midsize LCD (liquid crystal display) panel business into a new joint venture between the two.

Citing unnamed sources, a report in The Japan Times Sunday said the Taiwanese company viewed its request as a precondition for its planned investment into Sharp, and has also demanded Sharp accept board members from Hon Hai.

Sharp however is reluctant to agree to Hon Hai's request, the sources said, because it sees LCD panels as a key part of its operations and is determined to continue producing the panels independently to avoid an outflow of its technologies.

The report added that Hon Hai has already urged Sharp to let it take part in producing LCD panels for tablets and smartphones at Sharp's Kameyama plant.

A separate report in The Daily Yomiuri newspaper Saturday also said Sharp sees its LCD business as key to its rehabilitation plans, in which it aims to expand production of panels for tablet devices, such as the Apple iPad, to turn its ailing fortunes around.

Last March, Hon Hai said it will buy a 10 percent stake in Sharp for some US$800 million, becoming its largest shareholder.

However, talks over the deal have been stalled for months with Sharp's steadily-plummeting share price, growing losses and major restructuring plans, prompting not just Hon Hai to consider a revision of the agreement, but also Taiwan's Ministry of Economic Affairs to express concern that Hon Hai could be overpaying for the stake in Sharp.