TOKYO Ė Terry Gou, founder of Taiwanís contract manufacturer Hon Hai Precision Industry Co. Ltd. (known as Foxconn), has been consistent in its one naked ambition: To build technology prowess at Foxconn that surpasses Korean giant Samsung Electronics. The key to that goal, in Gouís mind, lies in Hon Haiís building an intimate link with Japanís leading LCD panel manufacturer Sharp Corp ó which did not really exist.
Until now. A deal has been made at last, possibly rendering Gouís goal good to go.
Sharp Corp. will transfer the companyís advanced, small-to-medium LCD panel technology to a Hon Hai fab -- currently under construction -- in Chinaís Sichuan province, Nikkei, Japanís economic newspaper, reported Friday.
This move represents the first tangible joint project between the two companies, built upon a Hon Hai/Sharp deal that was signed at the end of March.
Under the initial deal, the two companies agreed to Hon Haiís taking a 9.9 percent stake in Sharp, while the Taiwanese firm's billionaire founder Gou invested his own money into Sharpís Sakai fab Ė gaining a
46.5 percent share. The Sakai fab Ė opened in 2009, capable of handling super large glass substrates Ė is considered an important milestone in LCD panel production but it has been struggling with a disappointingly low run rate.
If indeed Sharp participates in Hon Haiís LCD panel production in China, the two companiesí collaboration wonít be limited to large LCD panel production for TVs at the Sakai fab in Japan. The partnership will include small-to-medium LCD panel production for smart phones and tablets.
Nikkei said the new technology transfer, for which Sharp will receive tens of billions of yen in fees, is aimed at improving quality management at Hon Hai's planned plant in Chengdu.
A Sharp spokeswoman said the company was "considering a number of options," but declined to comment on the report.
Revenue Share of small/medium flat panel displays by panel manufacturers in 2011
Source: NPD DisplaySearch Quarterly Small/Medium Shipment and Forecast ReportJapanese display manufacturers who have lost ground to Korea in the battle over large-screen flat-panel TV
have been scrambling to take their lead back in small/medium flat panel displays. Sony, Toshiba and
Hitachi banded together late last year to form a joint venture called Japan Display. Focused on LCD panels for mobile devices, the Japanese joint venture finally began operating last month. While Sony, Toshiba and Hitachi each have a 10 percent stake in the business, the main investment comes from the government-backed INCJ (Innovation Network Corporation of Japan).
Sharp had been repeatedly invited to participate in Japan Display. But Sharp Ė in negotiations with Hon Hai for almost a year Ė declined a spot in Japanís all-star venture. Sharp is clearly betting its future
[and survival] on the newly formed partnership with Hon Hai.
Meanwhile, Sony and Panasonic have been separately talking to each other on potential collaboration on volume production of OLED panels through technology partnering.