Sharp in talks with Chinese firm to produce LCDs
(Kyodo News International (Tokyo) Via Acquire Media NewsEdge) Feb. 21--OSAKA -- Sharp Corp. is in talks with a major Chinese electronics maker SVA (Group) Co. to jointly produce in China liquid crystal display panels used for TV sets, paving the way for its first offshore production of the products, sources familiar with the negotiation said Saturday.
The Japanese electronic maker has been producing LCD panels in Japan and exporting them overseas. But as the recent appreciation of the yen has eroded its profits, Sharp wants to shift production overseas to boost its competitiveness, the sources said.
Sharp is also considering an alternate plan to sell the production equipment at its Kameyama factory in Mie Prefecture to SVA so that the Chinese company can manufacture the TV panels, the sources said.
Sharp is hoping to reach a basic agreement by this spring, they added.
The No. 1 plant at the Kameyama factory has suspended production of the so-called sixth generation panels, while the No. 2 plant manufactures eighth-generation panels. Sharp has been trying to remodel the No. 1 plant to build small and midsized panels.
If the deal with SVA is reached, Sharp will suspend the remodeling process and transfer its equipment to China, the sources said, while noting that other Chinese companies could emerge as a potential partner.
SVA is hoping to produce LCD panels through a joint venture with Sharp as it can reduce investment costs that way, they added. Sharp is believed to prefer selling its equipment to the Chinese firm.
The LCD panels, produced at the No. 1 Kameyama plant, have been shipped to factories overseas to make televisions in such places as Mexico, Poland and China.
Sharp is expected to accelerate its efforts to shift the production of older-generation LCD panels abroad to hedge exchange rate fluctuations that affect their bottom line and to boost its price competitiveness there.
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