U.S. giant sees boost in chip sales via alliance

Intel may pump up to ¥40 billion into ailing Sharp

Kyodo, Bloomberg

Sharp Corp. is in final talks with Intel Corp. to receive around ¥30 billion to ¥40 billion of investment as the struggling electronics maker seeks to lift its financial standing, according to sources.

The U.S. company apparently hopes to expand its sales of semiconductors through the possible business alliance, which is expected to help launch personal computers and other digital products equipped with Sharp’s advanced power-saving liquid crystal display panels and Intel’s microprocessors.

Sharp is also in talks with U.S. telecommunications giant Qualcomm Inc. on a capital and business tieup, the sources said.

Sharp, which is aiming to turn its business around by expanding its supply of the Igzo LCD panels, is also mulling forming business alliances for the panels with several companies, including Apple Inc., Google Inc. and Microsoft Corp.

Given the report of a capital tieup with Intel, Sharp stocks rallied Wednesday on the Tokyo Stock Exchange, finishing the day at ¥163, up 7.24 percent. At one point in morning trade, the stock surged more than 10 percent.

“The report is easing some concerns about Sharp,” said Mitsuo Shimizu, an analyst at Iwai Cosmo Holdings Inc. “Still, the rally will be short-lived as the amount of money isn’t enough to solve Sharp’s problems.”

Sharp isn’t the source of information for the report, and nothing has been decided, the Osaka-based company said in a statement. Chuck Malloy, a spokesman for Intel, declined comment.

Sharp is continuing talks on a capital tieup deal with Taiwanese business partner Hon Hai Precision Industry Co., better known as Foxconn, but the negotiations have stalled as Sharp’s stock price has plummeted since the two companies reached an accord in March.

If the envisioned alliances with Intel and Qualcomm help improve Sharp’s earnings and subsequently help lift its stock price, talks with Hon Hai may move forward, industry observers said.

When Sharp and Hon Hai agreed that the Taiwanese company would buy Sharp stock, shares were going for ¥550. Recently it had been hovering slightly above ¥150.

In the first half of the business year through March, Sharp’s group net loss expanded to ¥387.58 billion from a loss of ¥39.82 billion a year earlier due to flagging television sales.

For the full year, the company expects to post its largest-ever group net loss of ¥450 billion.