OSAKA -- Sharp is trying again to crack the market for TV display panels by possibly reclaiming ownership of a key factory near Osaka, Chairman and CEO Tai Jeng-wu told Nikkei on Friday.
The Sakai plant, which came online in 2009, is capable of processing some of the world's largest glass substrates into liquid-crystal displays. Its roughly 430 billion yen ($4 billion) price tag was a major factor behind Sharp's financial troubles in recent years.
But the plant's operating company, Sakai Display Products, "is a valuable asset as we advance our 8K [TV] strategy," Tai said. He said he was carefully weighing the option of turning Sakai Display into a subsidiary, based on assessments by financial institutions and other factors.
Sakai Display is currently under an investment company owned by Terry Gou, chairman of Sharp parent Hon Hai Precision Industry, better known as Foxconn, and is an equity-method affiliate of Sharp.
Sharp produces LCDs at its Kameyama plant in Japan's Mie Prefecture, among other locations. But these facilities use smaller substrates, which means they are not efficient at creating larger panels for use in TVs.
Sakai Display Products' huge plant can be seen in the background in Sakai, Osaka Prefecture. In the foreground is Sharp's headquarters. (Photo by Kento Awashima)
Bringing Sakai Display back into the fold would be an important step for Sharp to take on the burgeoning market for 8K TVs. Any deal would likely only involve the Sakai plant, and not Sakai Display's new plant under construction in Guangzhou, China.
As a Sharp subsidiary, Sakai Display would be able to take advantage of technology patented to the parent. Sharp believes the Sakai plant could differentiate itself against Chinese and South Korean competitors using Sharp's proprietary IGZO display technology.
Sakai Display booked a 28.4 billion yen net loss in 2018, partly due to Sharp adjusting its inventory of LCD TVs. The company could potentially weigh down Sharp's earnings.
Still, Tai has been working on streamlining Sakai Display since the beginning of the year, and cultivated new client bases as well. "We are hoping to cut costs by about 40 billion yen a year," he said.
In terms of Sharp's future as a whole, "we will make full use of cutting-edge fields like 8K, 5G [wireless communications] and the 'internet of things' to expand services and solutions for corporate clients," Tai said.
Corporate clients are responsible 35% of Sharp's revenues, excluding electronic devices. "We want to raise that to 50%," Tai said.
He said Sharp currently lacks the talent to meet this goal, however. "We plan to fill the hole through targeted acquisitions and partnerships," he said.
Tai also touched on the possibility of assisting Japan Display, which is struggling as the Taiwanese-Chinese consortium that agreed to a 80 billion yen bailout drag its feet. "We haven't been contacted" by Japan Display, Tai said, but added that Sharp "will consider the possibility if we are approached."
One option Tai gave is for Sharp to rent and operate a Japan Display factory. "If Sharp can turn a profit at that facility, that would lessen" Japan Display's burden, he said.
