Business / Corporate

Sharp mulling spinoff of liquid crystal display business

Kyodo

Embattled Sharp Corp. is considering selling its struggling liquid crystal display business, sources close to the matter said Friday, with Taiwan’s Hon Hai Precision Industry Co. and rival Japan Display Inc. viewed as potential buyers.

Sharp may spin off its LCD business into a new company and sell a majority stake in it, the sources said, adding that the Osaka-based company is seeking to decide on a reform plan for the LCD business by the end of the year.

Sharp is also in final negotiations to sell its head office in Osaka’s Abeno Ward to the NTT Corp. group’s Urban Development Corp., the sources said.

The sale value is estimated at about ¥10 billion ($83 million), according to the sources.

Under restructuring plans that include early retirement, for which 3,234 employees in Japan have applied, Sharp aims to improve earnings by ¥28.5 billion in the business year to March 31.

To cut costs, Sharp offered early retirement to 3,500 employees as part of a three-year business plan announced in May.

Sharp’s mainstay LCD business accounts for roughly 30 percent of its total sales, but the company has been struggling to turn a profit. The LCD operation incurred a ¥13.7 billion operating loss in the April to June period due mainly to poor sales in China.

Sharp and Hon Hai Precision Industry, the world’s biggest contract supplier of electronics products, have been in talks for a possible tie-up on small and midsize LCDs, according to other people familiar with the matter. The two companies jointly operate a plant in Osaka that produces television LCDs.

A potential deal with Japan Display, created through a merger of the small and midsize LCD operations of Hitachi Ltd., Toshiba Corp. and Sony Corp., could increase their global competitiveness, but it may raise antitrust concern.

Sharp and Japan Display have been competing in the smartphone LCD field.