Sharp seeks ¥100 billion from state-backed entity to spin off LCD unit


Sharp Corp. plans to spin off its business for small and midsize liquid crystal displays by having a government-backed fund invest around ¥100 billion in the new subsidiary by the end of next March, sources close to the matter said Sunday.

The sources said the struggling electronics maker has already sounded out Innovation Network Corporation of Japan, an investment fund set up with public- and private-sector funding, about spinning off its core LCD panel business.

Sharp has set up an internal team to spin off the business and plans to make it part of a new medium-term management plan to be unveiled in May, the sources said. Sharp’s main lenders have apparently consented to the move.

Sharp’s Kameyama plant in Kameyama, Mie Prefecture, is expected to be transferred to the new group company.

Sharp hopes to work out a deal with Innovation Network Corporation that would give the fund a slightly more than 40 percent stake in the subsidiary, but there is also a plan to have the fund instead invest in Sharp itself, the sources said.

Innovation Network Corporation, supervised by the Ministry of Economy, Trade and Industry, helped form Japan Display Inc., which was set up in 2012 by merging the display units of Sony Corp., Toshiba Corp. and Hitachi Ltd.

The latest rumors raise the possibility that Sharp and Japan Display may work together to compete against South Korean and Chinese LCD makers who are undercutting their Japanese rivals.

Sharp, once a leader in the segment, is struggling to remain profitable in LCD panels amid competition from Japan Display, which began supplying Chinese smartphone makers in the latter half of 2014.

Spinning off the core unit is expected to speed up Sharp’s decision-making ability, the sources said.

The Osaka-based company, whose solar cell and television divisions are running in the red, expects a group net loss of around ¥200 billion for the business year ended March 31.

It is seeking financial support from the Bank of Tokyo-Mitsubishi UFJ and Mizuho Bank.

  • Liars N. Fools

    Survive by shrinking and then joining forces with others. That is not a bad strategy by Sharp. But why does it require a subsidy from the government? I know it is not a direct subsidy, but shrinking and restructuring is not innovation in the usual sense. It is book cooking, and not all that imaginative.

    I like Sharp and Sharp products. But a different type of “innovation” is necessary.