Hon Hai Will Become Sharp's Largest Shareholder

Taipei, March 28, 2012 (CENS)--Hon Hai Group announced yesterday (March 27) entering an alliance with Sharp, Japan's leading LCD maker, by obtaining 10.95% stake, at a cost of 66.9 billion Japanese yen (NT$23.8 billion), in Sharp, thereby becoming the latter's largest shareholder. Meanwhile, Terry Guo, chairman of Hon Hai, will also buy into the 10th-generation FPD (flat panel display) plant of Sharp as an individual investor.

Total scale of the cooperation hits 132.9 billion Japanese yen (NT$47.3 billion).

The investment is another major deployment of Hon Hai in the FPD field, following the takeover of Chi Mei Optoelectronics, and Hon Hai will extend its reach to brand business of FPD. In its press release, Hon Hai doesn't rule out the possibility for Sharp to buy into Hon Hai, thereby forming a relationship of mutual shareholding.

Industry insiders noted that in addition to the relief of Sharp's funding problem, the investment will also enable Hon Hai to secure the TV contract assembly orders from Sharp and Sony, as well as more orders from Apple via the utilization of Sharp's technology.

The world's four largest FPD makers are, in descending order, LGD, Samsung, Chimei Innolux, a Hon Hai subsidiary, and AU Optronics. The tie-up between Chimei Innolux and Sharp will boast global market share of 20%, trailing LGD at 31% and Samsung at 25%.

Hon Hai Precision, flagship firm of Hon Hai Group, will join hands with three affiliates, Foxconn Technology, Foxconn (Far East), and Q-Run, to obtain 10.95% stake in Sharp, exceeding Nippon Life to become Sharp's largest shareholder.

Moreover, Terry Guo will also buy into, as an individual investor, Sharp Display Products, a subsidiary of Sharp, which owns a 10th-generation FPD plant in Osaka. Sharp plans to sell 46.48% stake in SDP to Guo and some institutional investors, at cost of 66 billion yuan (NT$23.5 billion). In the future, Hon Hai will procure half of the output of FPD and modules of SDP.

Hon Hai stressed that Sharp owns a globally renowned brand and top-notch technological strength, while Hon Hai boasts strong vertical integration capability for optoelectronic technology and precision manufacturing. The close cooperation between the two parties is supplementary, capable of producing an outcome of co-prosperity.