Japan’s Sharp Ties Up With Chinese Electronics Firm To Set-up Cutting Edge LCD Panel Factory

Sharp Corp of Japan on Thursday announced it had entered into a $2.9 billion partnership with state-owned China Electronics Corp to set-up a cutting edge LCD panel factory in China that will mass-produce LCD screens for TVs, computers and tablets.

Majority owned by China Electronics Corp, the plant will begin production in June 2015. It targets tp manufacture 60,000 LCD panels per month, measuring 2.2 x 2.5 meters. These panels can be divided into smaller sizes for consumer products.

To realize the alliance, Sharp would have to hand over to China Electronics its prized IGZO (indium gallium zinc oxide) panel technology. IGZO displays consume only a measly 10th of the battery power of conventional displays.

"The strategy to be wholly self-sufficient, aimed at preventing intellectual property leaks, limited our ability to meet changing market demands," Miyuki Nakayama, Sharp spokeswoman, said. "We are changing our strategy. Our rivals will catch up to us eventually anyway."

By rivals that would mean Japan Display Inc. and South Korea's LG Display Co. which were quick to find ways to create power-saving displays.

But analysts think this alliance could eventually set the demise of Sharp's competition, unless they can immediately think fast of new innovations.

"Once Sharp combines its technical know-how with China's production efficiency and capital, it will threaten the current leading position of Korean panel makers including LG Display and Samsung Display," Jeon Byung-ki, analyst with E-Trade Securities, was quoted by Korea IT Times.

Cash-strapped Sharp is working on business restructuring by reducing assets through optimization of the value chain. It plans to enhance its global competitiveness by optimally combining technology, human resources and production for each value chain, such as technology development in Japan, panel planning in the countries or regions close to consumer markets, and production in the countries or regions taking advantage of low production cost infrastructure, respectively.

By combining its advanced LCD technology with the highly efficient technology of China Electronics, Sharp will establish a system to provide highly competitive LCD panels and modules in a stable and timely manner, while at the same time steadily growing its LCD business.

Sharp suffered a ¥545 billion (AU$5.9 billion) loss last fiscal year. It expects to rebound to a ¥5 billion (AU$54.8 million) profit during the current period.