Foxconn stalls on £3bn Sharp deal as analyst predicts ‘major long-term impact on display industry’

Mainstream consumer tech manufacturer Foxconn – which produces the iPhone, Xbox, Kindle and more – has stalled on a deal to acquire TV and panel vendor Sharp.

Taiwanese firm Foxconn was set to purchase the Japanese brand for $4.3 billion (£3 billion) but the proposed agreement has had a last-minute hitch.

Foxconn says it has received new information from Sharp which is must peruse over.

"We will have to postpone any signing of a definitive agreement until we have arrived at a satisfactory understanding and resolution of the situation," Foxconn said in a statement.

Sources apparently told the Wall Street Journal that Foxconn is concerned Sharp could have billions of pounds worth in liabilities, or debt. 

Sharp recently announced it had made a net loss of £630 million for the April to December 2015 period. The firm has struggled in recent years and has had a couple of bailouts.

While Foxconn puts together the iPhone, it doesn’t make the displays. In buying Sharp, it would acquire its own panel manufacturing business and thus not have to work with as many external partners, saving costs.

WitsView, a division of analyst firm TrendForce, says a potential deal ‘will have a major and long-term impact on the display industry and the related panel application markets’.

It said in a statement: "Among Sharp’s offerings, the LTPS panel technology is the most important prize for Foxconn. One of the chief reasons behind Foxconn’s repeated and aggressive overtures to Sharp was the Japanese panel maker’s contribution to the small-size panel application.

"WitsView’s analysis has ranked Sharp as one of the top three LTPS panel suppliers worldwide in 2015, accounting for about 18 per cent of the global capacity. This alliance therefore will immediately give a big boost to Foxconn’s small-size panel capacity.

"Taking into account that Foxconn is also a majority shareholder of Innolux, the Taiwanese electronics giant will indirectly control an equivalent of 20 per cent of the world’s large-size panel capacity after the completion of the acquisition.

"From a corporate culture perspective, Foxconn’s strength lies in the integration of matured technologies rather than the deployment of new and untested technologies. The prospect of a Taiwanese-Japanese alliance to invest in OLED manufacturing is there, but such venture would probably not reach economies of scale in the short term.

"Overall, the possibility that a restructured Sharp could soon become a major OLED panel supplier is somewhat remote."

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