Apple’s favorite contract manufacturer Foxconnn secures 11% stake in Retina display maker Sharp

Japanese electronics maker Sharp said today it will form a strategic global manufacturing partnership with Foxconn parent Hon Hai Precision Industry Co that will see the latter take eleven percent ownership in the former. In a nutshell, an assembly company has just purchased a stake in a manufacturer.

Things get really interesting knowing that Hon Hai’s Foxconn is Apple’s long-standing manufacturing partner producing iPhones, iPads and Mac notebooks, but also PlayStation 3s, Xbox 360s and a host of other consumer electronics products for Western companies.

On the other hand, Sharp is currently on Apple’s list of supply chain partners and has allegedly produced 2.71 million Retina display panels for the new iPad, with plans to ramp up production in the second quarter. This strategic partnership should also help Foxconn and Sharp together battle LG and Samsung for Apple orders.

By combining their respective operations, Foxconn and Sharp will together run Sharp’s LCD plant in Sakai. Sharp is also expected to benefit from Foxconn’s size as it will gain a much-needed leverage in negotiations over parts prices.

Revenues will be split evenly between the two partners and Foxconn will get an eleven percent ownership stake in Sharp. As for the LCD plant in Sakai, Osaka, Sharp and Foxconn will hold a 46.5 percent stake each, with Sony also owning seven percent of the operation.

A rumor last August asserted Apple would invest a whopping one billion dollars in a Sharp LCD plant. While this never came to be, Apple’s fortunes are closely tied to Foxconn’s ability to manufacture gadgets on time and in volume. Foxconn is by far the world’s largest contract manufacturer of consumer electronics, employing an estimated million workers.

Knowing that Foxconn purchased about a thousand expensive Fanuc CNC machines to make Unibody MacBooks, it’s not surprising they are now partnering with Sharp in order to secure orders from Apple.

Make sense?