Samsung may have killed two birds with one stone with its investment in Japan’s Sharp Corp. For $110 million, the Korean conglomerate gets a stake in a TV screen manufacturer and a relationship with one of Apple’s key suppliers.
Apple’s dependence on Sharp made headlines last year when shipments of the iPhone 5 touchscreen were delayed, and Sharp got the blame. The consumer electronics powerhouse was teetering on the brink of bankruptcy, but in recent months several other companies have come to Sharp’s rescue. Japanese banks were the first to pitch in, followed by Hon Hai, Qualcomm ($120 million) and now Samsung. The $188 billion behemoth is paying $110 million for 3% of Sharp.
Ironically, Samsung is one of the major reasons Sharp finds itself in financial trouble. The Japanese company’s TV business has been clobbered by its Korean rival.
Now Sharp could find itself caught between Samsung and Apple. Late last year reports made the rounds that Apple had also invested in Sharp, with one analyst speculating that Apple had spent $2 billion to prop up its Japanese supplier. If that’s true Samsung’s $110 million probably won’t buy it much leverage when it comes to the Apple/Sharp relationship.
One thing is clear: high resolution screens are important to device makers, and Sharp has a valuable technology in this area. Its screens are called IGZO (indium gallium zinc oxide) LCD displays, and they consume a fraction of the power of traditional LCD screens.
So far, all of Sharp’s saviors seem more interested in keeping the company alive than in buying Sharp or its technology outright. Hon Hai has been discussing a stake in the company for months, with Reuters reporting this week that those talks are back on. Hon Hai, also known as Foxconn, already bought a one-third stake in a Sharp manufacturing plant in western Japan.
