TOKYO — Helped by strong demand for the small and midsized LCD panels used in smartphones and tablets, Sharp Corp. reported for the latest April-June quarter an operating profit of 4.6 billion yen (US$45 million), up 55 percent from the same period a year ago. Sharp, however, failed to earn a net profit for the quarter. The company logged a net loss of 1.7 billion yen, marking four consecutive first-quarter losses.
The latest quarterly results exposed both Sharp's strengths and weaknesses. The good news is the demand for small and midsized LCD panels, as Sharp's lead customers are said to include both Apple and Chinese smartphone maker Xiaomi.
Sharp, meanwhile, has struggled with its energy solution business, as solar panel demand for residential applications both in Japan and overseas has dropped. Operating profit in Sharp's energy business unit shrank dramatically by 97.3 percent to 100 million yen (US$975,000) in the first quarter.
Contributing to the net loss were special costs, including 14.3 billion yen (US$140 million) for exiting solar cell production and solar power generation in Europe. Sharp is handing its share of joint venture 3Sun to partner Enel Green Power SpA, a subsidiary of Italian utility Enel SpA. Sharp said earlier that it would sell its 33.3 percent stake for a token €1 as soon as it receives approval from 3Sun's lenders.
As Sharp tries to recover from heavy losses, it is focused on cutting costs and dumping unprofitable businesses. Although the net loss narrowed to 1.7 billion yen from a loss of 17.9 billion yen during the same period a year ago, Sharp's dependence on the LCD business hasn't changed. It continues to rely on LCD panels -- the very product segment that put Sharp in a big hole in recent years -- to dig itself out.
Nikkei, Japan's economic journal, reported that Sharp will start shipping high-resolution IGZO (indium-gallium-zinc oxide) panels this month from the company's Kameyama No.2 plant. This will be in addition to the comparable high-resolution displays Sharp has been producing at its Mie No. 3 plant.
The production shift at Kameyama No. 2 from large TV panels to volume manufacture of smaller panels for smartphones and tablets is significant, as Sharp races to reduce the cost of IGZO panels.
Because the Kameyama No. 2 plant was originally designed to use larger glass substrates, Sharp believes those substrates could yield 10 times more smartphone panels per sheet.
Sharp is reportedly using Kameyama No. 2 to produce panels for Xiaomi's RedMi smartphone and its RedMi 5.5 inch phablet.
— Junko Yoshida, Chief International Correspondent, EE Times