OSAKA – Struggling electronics maker Sharp Corp. is in talks with China’s Lenovo Group Ltd. over forming an alliance in the liquid crystal display TV business, sources said Thursday.
Under the envisioned tieup, Sharp would sell its LCD television assembly plant in Nanjing to Lenovo and cooperate in the development and sale of TVs in China, the sources said.
The two companies are expected to sign a memorandum as early as this month, with Sharp looking to utilize Lenovo’s sales network in the Chinese market and Lenovo seeking to fully launch TV operations, according to the sources.
Sharp would sell all of its shares in its Chinese subsidiary that makes TVs to Lenovo by the end of this year. The Osaka-based company could also allow Lenovo to invest in another of its local units engaged in development and sales to create a full-fledged joint venture.
LCD panels for televisions are likely to be supplied from Sharp’s plants in Kameyama, Mie Prefecture, and Sakai, Osaka Prefecture, boosting operation rates at both factories.
Sharp is also negotiating the sale of its Malaysian TV assembly plant to Taiwan’s Wistron Corp., and is in talks with its Taiwanese business partner, Hon Hai Precision Industry Co., to sell its Mexican television assembly facility.
If Sharp succeeds in selling the three assembly plants in Nanjing, Malaysia and Mexico, the move is expected to generate around ¥40 billion and slash more than 5,000 employees to improve its financial standing.
Although Sharp said it has not made any decision related to its TV business, its stock jumped nearly 7 percent to ¥337 in morning trading Thursday on the Tokyo Stock Exchange following the reports.
Just like rivals Sony Corp. and Panasonic Corp., Sharp has suffered a series of credit-rating downgrades. The company has warned it projects a $5.6 billion loss in the fiscal year to March 31, and has been hunting for potential suitors for the three plants.
In December, the company announced it had struck a ¥9.9 billion capital injection deal with U.S. chip-maker Qualcomm Inc. that would see the pair develop energy-efficient LCD panels for smartphones using Sharp’s technologies. Quialcomm would initially receive about 2.64 percent of Sharp’s stock under the deal.
Last year, Sharp said it had also reached a roughly ¥71 billion capital injection agreement with Hon Hai Precision, which makes Apple Inc. smartphones in China, but the deal stalled after Sharp’s share price nose-dived.