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Samsung with $110m investment in Sharp(Baystreet Tech Insider (Canada) Via Acquire Media NewsEdge) Samsung Electronics Co, with a $110-million U.S. investment in cash-strapped Sharp Corp, will broaden its supplier base, gain access to low-power thin screen technology and get a foot in the door at one of Apple Inc's key Asian display suppliers. The relatively low-cost deal will leave Samsung with a 3% stake in Japan's TV pioneer, making it a leading foreign shareholder alongside chipmaker Qualcomm Inc, which in December agreed to invest as much as $120 million U.S. Shares in Sharp, which was bailed out by its banks last October, jumped on news of the lifeline. It is also a rare cross-border technology deal between two rival countries and the first time the South Korean TV maker has taken a stake in a major Japanese rival. Japan's three big TV set makers, Sharp, Sony Corp and Panasonic Corp, are struggling to overcome losses as Samsung clobbers them in overseas markets. Although Sharp is one of Samsung's smallest suppliers, its importance to the Korean company will likely grow as demand for large-screen TVs over 60 inches burgeons, analysts say. Preferential pricing could improve Samsung's competitive edge in TVs. The deal could also niggle Apple by soaking up capacity at a plant that makes iPad and iPhone 5 screens. Analysts and industry researchers estimate that Sharp is Apple's second-biggest supplier after LG Display Co Ltd. Samsung may also benefit from access to the Japanese company's screen technology. Sharp, which got its start a century ago with mechanical pencils, makes high-resolution indium gallium zinc oxide (IGZO) screens that are thinner than conventional LCDs, require less backlighting, and consume as little as a tenth the power, giving mobile phones and other devices that use them longer battery life. That could allow Samsung to focus more squarely on an alternative display technology, organic light-emitting diode or OLED screens as thin as a credit card. The company has yet to announce when it will manufacture OLED TVs, which its home rival LG Electronics Inc started selling in February. Analysts covering Samsung also said it may want to tie up with or even acquire Sharp's solar panel business. For Sharp, the deal bolsters its chances of survival not only by putting much needed cash in its coffers but by generating new business that will help it to utilize more factory capacity. The Japanese company has had to slash production of Apple's iPad screens at its Kameyama facility since the start of the year, sources with knowledge of its output plans told Reuters in January, as consumer demand shifts to the iPad mini, for which Sharp is not a supplier. The deal also comes as a previous agreement for Hon Hai Precision Industry Co Ltd to buy a 9.9% stake for 67 billion yen ($720 million U.S) is unraveling, given a steep decline in Sharp's share price and a reluctance by the Japanese firm to cede any management control to the Taiwanese company. Separate sources told Reuters last month that a bank-backed revival plan for Sharp was unlikely to include a capital infusion from Hon Hai, which last year bought a one-third stake in Sharp's LCD plant in Sakai, western Japan. That plant is the world's only so-called 10th-generation display factory, which uses bigger sheets of glass that can be cut into large TV screens with less waste and lower cost. A Hon Hai spokesman said the Samsung deal would not alter his company's cooperation with Sharp and that investment talks were continuing between the two. © 1998 - 2013 Baystreet.ca Media Corp. All rights reserved. |