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Sharp plans Vietnam factory to sidestep trade war

Automotive LCDs for US market will not be made in China

Sharp is re-configuring its global production operations to lessen the impact of the U.S.-China trade war.   © Reuters

OSAKA -- Sharp said Thursday it has scrapped plans to produce displays for the American market in China and will instead build a new plant in Vietnam in order to avoid new tariffs being imposed in the long-simmering trade dispute between Washington and Beijing.

The Vietnamese factory will assemble automotive liquid crystal displays to be sold in the U.S. Some personal computer production of subsidiary Dynabook may shift to the new facility as well.

Sharp made the announcement shortly after U.S.-China trade talks in Shanghai this week appeared to yield little progress. "We don't know what new developments may come, or when," Executive Vice President Katsuaki Nomura told reporters Thursday. 

Later the same day, U.S. President Donald Trump announced a new round of tariffs on Chinese imports beginning Sept. 1. LCD imports will be on the goods affected.

Sharp did not disclose the investment amount to build the factory, set to begin operating in fiscal 2020 near Ho Chi Minh City.

Along with the U.S.-bound car display screens, which will incorporate LCD panels made in Japan, the plant will make air purifiers and other electronics for sale in Vietnam.

China accounts for nearly all of Dynabook's PC output at present, chiefly at facilities in Hangzhou. About 10% of this is shipped to the U.S. -- work that may shift to Vietnam.

Sharp also reported Thursday a net profit of 12.5 billion yen ($115 million) for the April-June quarter, down 35% on the year. Sales sank 4% to 515 billion yen. It was the first simultaneous drop in sales and profit for that quarter since Sharp's August 2016 purchase by Taiwan's Hon Hai Precision Industry, better known as Foxconn.

Sharp, which supplies parts for Apple's iPhones, has suffered from the slowdown in sales for the U.S. smartphone juggernaut, as well as from slumping TV sales in markets such as China. But the company's business with Apple appears headed for a recovery this quarter, and home appliance sales likewise look strong, leading Sharp to maintain its outlook for the year through March 2020.

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