Major Apple supplier Foxconn (Hon Hai) will take an 11 percent stake in Japanese electronics company Sharp in an agreement that seeks to not only aid Sharp financially but also contribute to joint development of LCD technology between the two companies, it was announced Tuesday.
As part of the agreement, Sharp will issue US$800 million worth of new shares to Foxconn as well as provide a 46.48 percent stake in a flat-panel television factory in western Japan where the two companies will now produce televisions together.
“Sharp can no longer handle everything on its own, from R&D to design, production, procurement, sales and services,” said incoming Sharp CEO Takashi Okuda. “In the competitive global market, Sharp’s vertically integrated model has reached its limit.”
Sharp plans to use the proceeds from the shares to invest in new LCD technology for both larger displays found on televisions and desktop computers as well smaller mobile devices such as tablets and smartphones. The relationship between Foxconn and Sharp is also expected to result in the joint development of new products going forward.
While Sharp was one of the companies behind the development of “retina” resolution display technology, it has thus far not contributed parts for the 2012 iPad; the majority of the new iPad’s displays are supplied by Sharp competitors Samsung and LG. The cash and cooperation with Foxconn will allow Sharp to ramp up production of displays for the Cupertino-designed tablet in the coming quarter.
As MacRumors notes, while Apple is not officially involved in today’s cooperative arrangement, the closer ties between the two companies will likely help Apple maintain a competitive edge in the development and deployment of new technologies for future Apple products.