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Sharp eyes spinoff and listing of LCD unit

Proceeds would be used to invest in next-generation screen technology, chief says

A Sharp ad  in Tokyo. The Japan-based company may spin off its operations for smaller LCDs used in such devices as smartphones.   © Reuters

OSAKA -- Sharp plans to spin off its liquid crystal display unit within two years in a bid to raise funds for investment in the next generation of panel technology.

"Sharp holds many patents related to panels and has the technological prowess that can raise funds from outside," Chairman and President Tai Jeng-wu told Nikkei in an interview.

The spinoff company will raise capital by going public in the stock market or through a private placement of shares. But Sharp will keep control of the unit.

The internal LCD unit, Display Devices, amassed estimated revenue of 700 billion yen to 800 billion yen ($6.5 billion to $7.4 billion) for the fiscal year ended March 2019. LCDs account for about 30% of Sharp's consolidated revenue.

"At the latest, I intend to carry out [the spinoff] by the end of fiscal 2021, when I step down as chairman," Tai said.

"Even if we list, Sharp will retain ownership of over 50%," he said.

Sharp's chief conducted the interview via video from New Taipei City, the Taiwanese headquarters of parent company and leading Apple assembler Foxconn, which trades as Hon Hai Precision Industry.

Display Devices develops and manufactures small to midsize LCD panels at two plants in Japan's Mie Prefecture. The unit also makes organic light-emitting diode panels at a facility in Sakai, a city near Osaka.

Sharp, based in Sakai, is in talks with Apple to jointly purchase Japan Display's LCD plant in the western Japanese city of Hakusan.

If the discussions prove fruitful, "the spinoff will apply to Hakusan as well," Tai said.

But Sakai Display Products, Sharp's equity-method affiliate producing large LCD panels for televisions, will be unaffected, the chairman said.

Foxconn is floating core subsidiaries in a quest to accumulate money for growth. In 2018, the group listed Foxconn Industrial Internet, which manufactures servers in China, raising 27 billion yuan ($3.85 billion) in the Shanghai market.

Sharp also plans to list by fiscal 2021 its personal computer subsidiary now known as Dynabook, which was purchased from Toshiba in 2018.

Following the LCD spinoff, Sharp's centrally controlled businesses will be reduced to consumer electronics, such as TVs and appliances, as well as products for smartphones and similar devices.

Sharp will start mass production of face masks later this month to ease Japan's supply crunch amid the coronavirus pandemic.

"It was planned from the start of March," Tai said, "and we've initiated test production at the Mie plant" in the town of Taki.

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