Foxconn boss cancels talks with Sharp over Samsung investment

By , Mar 19, 2013

Sharp PN-K321 (image 002)

Earlier this month we told you that Apple’s frenemy Samsung confirmed a plan to pour a cool $112 million into buying a three percent stake in Sharp. Making matters complicated, Sharp, an Apple supplier, has been trying to negotiate another investment from Apple’s favorite manufacturer Hon Hai Precision Industry, known in the Western world as Foxconn. Last year, as you know, Foxconn was trying to acquire an eleven percent stake in Sharp.

There have been indications that Foxconn wanted to re-negotiate after Sharp’s share price tumbled, but most recent reports assert the deal has all but fallen apart. We’re now hearing that Foxconn CEO Terry Gou has cancelled talks with Sharp after learning that his potential partner has gone to bed with Samsung, even more so now that Sharp is expected to supply more LCD panels to Samsung than to Apple…

Money Today reports that Sharp is boosting output of 32-inch LCD panels for Samsung and conducting negotiations on supplying small and medium-sized panels. The Seoul-based national daily newspaper explains that even though Sharp used to account for a third of LCD panels to Apple, it halved that production in early-2013 over the supposedly weak demand for the iPhone 5.

That’s a code-word for the complexities of Apple’s supply chain as the paper obviously didn’t get Tim Cook’s memo. Meanwhile, Japan’s Sankei Biz claims Samsung was also after Sharp’s photocopier segment, but was turned down due to much internal resistance at Sharp (the company is the world’s fifth-largest maker of photocopier machines).

iPad mini (landscape, in hand, display)

And thanks to Moneydj, we’ve learned that Foxconn Chairman and CEO Terry Gou earlier this month canceled his meeting with Sharp CEO Takashi Okuda and President Mikio Katayama after learning they are planning on selling a three percent stake to Samsung Electronics.

With the Samsung development – and the deadline for the proposed Foxconn-Sharp transaction closing on March 26 – we’re unlikely to see the two parties agree on the terms. In other words, Foxconn’s $700+ million bid to buy a stake in Sharp is clearly going nowhere as the discussions eventually came to a stalemate.

Sharp PN-K321

Word on the street is that Sharp had initially planned on telling the Foxconn CEO about the Samsung deal at the meeting, but decided to instead reach out to Foxconn’s management in writing.

What a mistake.

With that in mind, rumors of supply chain cutbacks don’t come as a surprise. With the supply chain side of Apple’s display business under pressure over the uncertainty about Sharp’s future, coupled with Samsung’s cunning involvement, Apple is now in the process of re-shuffling its display providers.

Short-sighted analysts, per usual, interpret this as a tell-tale sign of weak iPhone 5 demand.

According to market research firm DisplaySearch, LG Display accounted for 28 percent of the global LCD sales versus Samsung Display’s 25.1 percent share, the first time LG Display surpassed Samsung in the LCD market since 2005.

Sharp has supplied Apple with screens for iPhones and full-size iPads, but ongoing yield problems with IGZO panels and their exposure to specific customers like Apple makes the ailing Japanese giant more vulnerable than it needs to be.

SkyFire 5.1 for iOS (iPad screenshot 004)

If I were Sharp, I’d probably be open to lucrative orders from Apple’s foes because big investments into Sharp’s sophisticated display plants won’t pay off unless clients are ordering the panels.

The Wall Street Journal acknowledged as much by speculating Sharp could prioritize Samsung “as it will ship products to Samsung, whereas it had prioritized supplying components for Apple.”

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  • http://www.facebook.com/profile.php?id=1493735449 Mustafa Zaki

    Use IGZO panel beat samsung S4 resolution

  • felixtaf

    Samsung played in-between .. Its like to buy a member from your team to disrupt the supply chain. With Samsung in Sharp’s stake, Apple has to think and change the supplier. Samsung is a cunning copycat. And Foxconn deal cancelled bcoz to Apple’s involvement (may be)… Jus my thoughts…

  • http://twitter.com/int3nsive Int3nsive

    It’s funny because when we see “samsung” and “foxconn” in the same phrase, no one came here to talk about “child labor” … and the same old hypocritical stuff that only fandroids know so well…

  • pauleebe

    Is there anything Samsung literally won’t copy Apple on?

    Looks like Apple may be looking for another display supplier in the near future …

    • http://twitter.com/int3nsive Int3nsive

      Samsung, the overly attached apple fan.

  • http://www.facebook.com/joe.jonsen Joe Jonsen

    daaamn samnsung is really thirsty..lol [poor apple needs to move fast here..

    • http://www.facebook.com/tafk1 Taf Khan

      Poor is not a word one would associate with Apple. This is the biggest company in The Tech World we are talking about.

      • Kurt

        Troll alert

      • http://www.facebook.com/tafk1 Taf Khan

        Trol o lol o lol… U a big time Troll.

      • http://twitter.com/int3nsive Int3nsive

        no, he’s no a troll… he’s just plain stupid.. it’s different.

  • BoardDWorld

    At the end of the day it is just a shame, I was looking forward to having the IGZO display on an iPad mini.