• SHARE

Hon Hai Precision Industry Co.’s rescue of Sharp Corp. promises to bolster the Taiwanese electronics maker’s ambitions for a bigger role in clean energy in some of the world’s most polluting countries while also providing a firmer footing in Japan.

Hon Hai, also known as Foxconn, which reached a deal last week to take control of Sharp, has previously announced plans to improve energy efficiency at its factories and introduce more solar power in China and India. By buying Osaka-based Sharp, Hon Hai gains a company regarded as a pioneer in the development of solar panels.

“A merger with Sharp would give Foxconn access to a well-known brand name under which to sell its solar panels, and also strong distribution networks in Japan for wider solar-as-a-service offerings with smart home and battery technologies,” Jenny Chase, head solar analyst for Bloomberg New Energy Finance, said.

Hon Hai said in October that by 2018 it planned to build 400 megawatts of solar power capacity starting in Henan, China, as part of an initiative led by Apple Inc. Hon Hai makes iPhones and iPads for Apple at its factories in China.

In June, Hon Hai, together with Japan’s SoftBank Group Corp. and Bharti Enterprises Pvt. of India, announced the establishment of a $20 billion venture to add 20 gigawatts of clean-energy capacity in India.

“Harnessing renewable energy is a key pillar in our social and environmental responsibility strategy,” Hon Hai Chairman Terry Gou said at the time. “We are excited to join our industry partners, SoftBank and Bharti, in championing clean-energy solutions in India.”

In December, the venture won its first solar project in India, a 350-megawatt solar plant in the southern state of Andhra Pradesh.

The acquisition of Sharp gives Hon Hai access to technologies for distributed power and smart community businesses, said Andrew DeWit, a political economy professor at Rikkyo University in Tokyo.

“Considering Japan’s already large and expanding focus on national resilience via smart communities, Hon Hai would be unwise not to look at the big picture as opposed to merely the short-term bottom line,” he said.

Hon Hai said last year that it was in talks with U.K. investors to raise about $1.7 billion to make its operations in China more environmentally friendly, with plans for solar farms and replacing air-conditioning systems and installing efficient lighting systems.

Louis Woo, a spokesman for Hon Hai, declined to comment on how the Taiwanese company and Sharp plan to work together in clean energy.

By itself, Hon Hai has the capacity to make at least 400 megawatts a year of solar products in Funing, China. The company also has a module plant in Juarez, Mexico, according BNEF’s Chase.

Sharp, which began developing solar in 1959 and remains its oldest major manufacturer, has 500 megawatts of cell capacity and probably has some module capacity, she said.

Still, the ultimate fate of Sharp’s solar business is unclear even after the deal’s conclusion.

Sharp President Kozo Takahashi and Hon Hai’s Gou formally signed the rescue deal on Saturday. Hon Hai is paying ¥389 billion ($3.5 billion) for a controlling stake in Sharp.

Sharp said on March 30 that it intends to use ¥8 billion from Hon Hai’s infusion to shore up its energy-solutions business. That is the smallest amount planned for its different business segments. Some ¥200 billion has been allocated for next-generation screens using organic light-emitting diodes.

Sharp will continue to move ahead with its energy-solutions business and to provide after-sale services for solar panels and other energy-related products, Takahashi said in a statement posted on the company’s website Monday.

“We will work on strengthening sales of residential solar panels, storage batteries, and home energy management systems,” he said. “Also, we will work on the expansion of the engineering, procurement and construction business at home and abroad.”

All the same, the acquisition doesn’t necessarily mean Hon Hai will source panels from Sharp for its solar power projects, said Toshinori Ito, who heads Ito Research and Advisory Co., a consulting company on energy issues.

“Sharp products are not necessarily superior in terms of cost performance,” he said.

PHOTO GALLERY (CLICK TO ENLARGE)