In 1916, Sharp got its start making belt buckles and sharpened pencils — hence the name.
But a century later the firm, which ballooned into a global consumer electronics giant, found itself in dire straits, saddled with huge debts and mounting losses.
A restructuring plan failed to stop the bleeding and on Thursday Sharp agreed to be taken over by Taiwanese multinational Hon Hai Precision Industry Co., the world’s biggest electronics supplier, better known as Foxconn.
The offer would be the first foreign takeover of a Japanese electronics giant, marking a blow to the once-mighty sector populated by other global brands including Sony and Panasonic.
The deal stumbled Friday as Foxconn’s parent company said it would delay signing the pact to review new information it had received about Sharp, but analysts widely viewed a tie-up as all but done.
For years, Sharp — whose name once graced the jerseys of Manchester United soccer players — had remained true to its humble pencil-and-belt-buckle roots.
But after the 1923 Tokyo earthquake, which left more than 100,000 dead, company founder Tokuji Hayakawa expanded his little firm to making radio equipment and other items that could be used in a similar emergency.
Hayakawa, who died in 1980, lost his wife and two children in the quake.
After WWII, Sharp became the first Japanese firm to sell televisions. This tradition of innovation continued throughout the 1970s, with the mass production of liquid crystal display (LCD) screens for calculators — which in the 1990s was adapted for computer screens and later for smartphones and tablets.
Sharp is a global leader in those small- and medium-sized screens, which are a key asset for Hon Hai.
The companies have worked together for years on large-sized screen technology, including for televisions, and jointly operate an LCD panel plant in Japan.
But over the last decade Sharp bet almost everything on LCD, churning out giant screens from cutting-edge factories and boasting the most advanced technology in the world.
“The problem is they invested too heavily in LCD screens,” said professor Akio Makabe of Shinshu University.
“For a while that was fine, but with the financial crisis of 2008-9, everything changed. The market became more competitive in terms of price and Sharp wasn’t the best placed to deal with that,” he said.
Sharp’s key technological blessing today has also proven to be a curse: it produces LCD screens favoured by industry giants Apple and Samsung, but lacks the huge research and development funds necessary to keep ahead of the competition.
In 2012, a state-backed fund created Japan Display, which aimed to merge Sharp’s small- and medium-sized LCD screen business with those of rivals Sony, Hitachi and Toshiba.
The new company was seen as a way for Japanese firms to mount a strong challenge to overseas rivals. But Sharp refused to take part.
“LCD was absolutely central to Sharp so (a merger) was tough to accept,” Makabe said.
But the firm was not in a position to buy out its local LCD competitors, he added.
Sharp’s decision to sell to a Taiwanese firm made clear it was turning its back on a common move by Japanese firms to merge in a bid to fend off overseas competition.
“This sort of consolidation probably wouldn’t be workable,” said Kunio Saijo, a senior technology journalist at the Nikkei business daily, before the Hon Hai deal was announced.
Makabe at Shinshu University said the offer from Hon Hai’s colorful billionaire founder Terry Gou was “financially superior,” and noted that both firms count Apple as a major client.
The Japan-based solution “would also have meant the involvement of (Sharp’s creditor) banks, which wouldn’t have been ideal,” he added.
But even a foreign buy-out does not guarantee Sharp’s future.
LCD technology is facing a stiff challenge from rival technologies including organic light-emitting diodes (OLEDs). Sharp and Hon Hai have plans to invest billions of dollars in OLED technology.