Tony Huang, DIGITIMES Research, Taipei [Friday 8 March 2013]
Samsung Electronics' recent investment of US$110 million in Japan-based Sharp can be seen from a number of angles, most notably Sharp's dire need to salvage itself from the brink of bankruptcy.
Back in September 2012, Sharp accepted JPY360 billion (US$3.78 billion) in loans from Mizuho Corporate Bank and the Bank of Tokyo-Mitsubishi UFJ that have to be repaid by June 2013. As Sharp has been continuing to report losses throughout the beginning of 2013, and is expected to do so at least throughout the first quarter, the company has had to seek out other investors due to concerns it may struggle to meet the loan payment deadline, according to Digitimes Research.
Additionally, Sharp's investment talks with Foxconn Electronics (Hon Hai Precision Industry) have been put on hold and there is still uncertainty about whether the two companies will extend their relationship beyond their mutually invested Japan-based 10G TFT LCD line, said Digitimes Research.
Samsung's benefit from the investment meanwhile will give the company more access to LCD TV panels, which will be important for tackling the TV industry, particularly in emerging markets. Samsung will be less reliant on receiving TV panels from China-based TV panel makers such as BOE and China Star Optoelectronics Technology (CSOT), which throughout 2012 hindered Samsung's TV development in China, added Digitimes Research.
Digitimes Research also said that Sharp's move is expected to not sit well with Apple, as Apple and Samsung had legal disputes throughout 2012.