Sharp to transfer LCD technology to Hon Hai’s China plant

TOKYO – Terry Gou, founder of Taiwan’s 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 Gou’s mind, lies in Hon Hai’s building an intimate link with Japan’s leading LCD panel manufacturer Sharp Corp — which did not really exist.

Until now. A deal has been made at last, possibly rendering Gou’s goal good to go.

Sharp Corp. will transfer the company’s advanced, small-to-medium LCD panel technology to a Hon Hai fab -- currently under construction -- in China’s Sichuan province, Nikkei, Japan’s 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 Hai’s taking a 9.9 percent stake in Sharp, while the Taiwanese firm's billionaire founder Gou invested his own money into Sharp’s Sakai fab – gaining a
46.5 percent share. The Sakai fab – opened in 2009, capable of handling super large glass substrates – 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 Hai’s LCD panel production in China, the two companies’ collaboration won’t 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.





Japanese 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 – in negotiations with Hon Hai for almost a year – declined a spot in Japan’s 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.