Japan state fund approaches Hon Hai about tie-up with revived Sharp

Kyodo

The government and a state-backed fund have made a proposal to

Taiwan’s Hon Hai Precision Industry Co. about a potential tie-up with

Sharp Corp. after the fund’s envisioned investment in the ailing

Japanese electronics maker, sources said

Wednesday.

The move is seen as an attempt by the government, wishing to keep

Sharp’s advanced technology in Japan, to tip the scales for the fund’s

rescue plan for Sharp and show its cooperative stance with Hon Hai.

The Innovation Network Corporation of Japan and Hon Hai have both

offered to come to the rescue of Sharp.

The chairman of the INCJ, Toshiyuki Shiga, said earlier this week that

¥300 billion ($2.5 billion) in investment will be needed for Sharp,

while Hon Hai is believed to have offered to purchase the Japanese

company for around ¥600 billion.

Going by the trade name Foxconn, Hon Hai, which has supplied Apple

Inc. products such as the iPhone series, is the world’s leading player

in contract manufacturing services for smartphones and home

appliances.

The government apparently sees potential for Sharp to have a future

partnership with Hon Hai, given its production capacity.

Still, the outlook remains uncertain for the Taiwanese company to

accept the proposal, which was made Tuesday when a senior Japanese

industry ministry official met with Hon Hai Chairman Gou Tai-ming,

according to the sources.

The INCJ is considering taking ownership of Sharp by obtaining a

majority stake and splitting off Sharp’s money-losing liquid crystal

display business.

The fund envisages integrating the unit later with Japan Display Inc.,

the maker of small and midsize LCDs in which the fund owns a stake,

other sources have said.