Sharp Corp. said Thursday it will decide whether to go along with the ¥600 billion rescue plan offered by Taiwan’s Hon Hai Precision Industry Co. or the ¥300 billion plan of the state-backed Innovation Network of Japan in a month, although it is “using more resources” to evaluate Foxconn’s proposal.
Earlier in the day, media reports said Sharp’s board of directors had selected Hon Hai to rehabilitate the ailing Osaka-based electronics giant. Hon Hai, also known as the Foxconn Technology Group, assembles Apple Inc.’s iPhones and iPads.
“Today’s board meeting was not about deciding which plan,” Sharp President Kozo Takahashi said at a news conference in Tokyo, playing down the headlines. “We confirmed the current progress.”
“We are very fortunate that both have proposed proactive plans to our company. We will carefully review them from various perspectives for all of our stakeholders,” Takahashi said.
The Japanese government is anxious to prevent Sharp going abroad given its lead in technologies such as LCD development.
Takahashi said although Sharp is currently using more resources to review Foxconn’s plan it does not mean that option has priority.
He said INCJ and Foxconn will both be scrutinizing Sharp’s businesses and finances further this month and making additional proposals before any decision.
Takahashi said Sharp is requesting that both maintain the cores of the LCD-related and non-LCD businesses and that they retain Sharp’s workforce.
Although several news reports earlier in the day said Sharp would pursue rehabilitation under Foxconn, it had been widely reported in recent months that Sharp would likely team up with INCJ.
The state-backed fund was reportedly aiming to split off Sharp’s LCD division and merge it with Japan Display Inc. to make an “all-Japan” LCD force, because the Ministry of Economy Trade and Industry does not want Sharp’s technologies to fall into foreign hands.
Yet some analysts have argued that such a merger would be too big and pose the risk of raising antitrust issues overseas.
Takahashi also said that since Sharp and Foxconn have been jointly invested in Sakai Display Products Corp., which makes large LCD panels, for years without its technology leaking overseas, the firm is not worried about it.
INCJ is proposing to invest ¥300 billion, about half of Foxconn’s offer, in Sharp, according to media reports.
If Foxconn wins, it could use Sharp’s technologies to increase the value of its products such as smartphones and tablets.
Sharp in turn could receive synergies from Foxconn’s large-scale manufacturing and procurement, Takahashi said.
Sharp also announced its April-December earnings results Thursday, posting ¥1.9 trillion in sales, a ¥29 billion operating loss and a ¥108 billion net loss. Its full-year forecast of ¥2.7 trillion sales and a ¥10 billion operating profit remained.