Hon Hai Precision Industry, parent of Foxconn, announced that it has acquired a 10 percent share of consumer electronics unit of Sharp, as well as almost half of the shares in LCD maker Sharp Display Products.
Hon Hai paid about $806 million, which is expected to provide the company with access to basically half of all LCD panels produced by the company. Given the increasing importance of display technologies, this could give Hon Hai and especially Foxconn a huge strategic advantage in computer electronics manufacturing.
Sharp, however, is currently especially focused on large-screen displays for TVs and has been hit with significant price declines that forced the company to dip deep into the red over the past twelve months. The company expects to report a loss of nearly $3.5 billion for the most recent fiscal year. With the help of Hon Hai, Sharp could enter the market for more profitable smartphone and tablet displays more easily, especially if Foxconn could directly offer a display supply to its customers. Increased demand would enable Sharp to decrease costs per units.
Foxconn assembles products for several leading IT companies around the globe, including Apple, Dell, Hewlett-Packard, Sony and Nintendo.