Samsung Takes 3% Stake in Sharp, Key Supplier of iPhone and iPad Screens

[MacRumors]

Samsung has paid $112 million for a 3% stake in LCD screen manufacturer Sharp, a key supplier of LCD screens to both Samsung and Apple, reports The Wall Street Journal.

Sharp currently holds the technical lead in the manufacture of large-screen LCD panels, enabling it to produce TV screens bigger than 60 inches at a lower cost than other manufacturers. Despite this advantage, the company has been struggling financially over the last 18 months, laying off 11,000 staff and mortgaging key assets.

Sharp has been desperately seeking external financing to keep itself afloat, having received bank bailouts and receiving a $120 million investment from Qualcomm late last year. Foxconn was also set to make an investment in Sharp, but that deal has fallen apart as Sharp's financial picture has continued to deteriorate.

Sharp supplies LCD panels to both Apple and Samsung, including both iPhone and iPad screens, and*a WSJ blog suggests that Samsung may gain priority in future supply deals.

Monex market analyst Toshiyuki Kanayama said a Samsung-Sharp tie-up could "help Sharp to at least raise the efficiency of its panel-producing plant, as it will ship products to Samsung, whereas it had prioritized supplying components for Apple."

Samsung's bid to turn Sharp, once a major competitor, into an ally, shows how serious it is in winning a global battle with Apple for dominance in the lucrative market for mobile devices.

Samsung has been focusing its own screen manufacturing efforts on OLED technology, with analysts observing that closer ties with Sharp would help the company outsource more of its LCD production.

Article Link: Samsung Takes 3% Stake in Sharp, Key Supplier of iPhone and iPad Screens

[furi0usbee]

I don't understand why Apple doesn't take, say, a 30% stake in Sharp... done.

[turtlez]

Sounds like Samsung is trying to buy competition (Apple supplier). Playing their cards deviously but rewarding.

[notthedark]

Picturing bald Samsung CEO sitting in a giant leather chair stroking a white cat.

[rstone3]

Originally Posted by notthedark

Picturing bald Samsung CEO sitting in a giant leather chair stroking a white cat.

Perfect.

[iMikeT]

First Samsung copies Apple's products and now they copy the strategy of securing parts. What next?

[justperry]

Originally Posted by furi0usbee

I don't understand why Apple doesn't take, say, a 30% stake in Sharp... done.

Apple should pay fair prices for their components, if that would be the case then companies like Sharp amongst others would not have to cut 1000s of jobs.
Pays unfair low prices for components, sells for a premium.
Yes, yes, I know that's how businesses work, but still.

[Squilly]

Don't see why Samsung would help a competitor.... even if it's due to financial issues.

[mankar4]

This is how it should work: The industry should bail itself it out. Sharp is too big to fail, and Samsung helps to bail them out, in exchange for increased oversight by Samsung in the form of partial ownership.

[magamo]

Originally Posted by furi0usbee

I don't understand why Apple doesn't take, say, a 30% stake in Sharp... done.

Apple is a customer of Sharp while Samsun is more of a competitor as another LCD screen manufacturer. Apple's suppliers like Foxconn may be interested in buying shares of Sharp. But Apple wouldn't benefit as much, especially when Sharp isn't financially healthy.

[notjustjay]

Originally Posted by iMikeT

First Samsung copies Apple's products and now they copy the strategy of securing parts. What next?

Yeah, cause Apple invented business strategy. I hope they patented it too!

[HockeyMike]

Apple has already secured long-term agreements that will provide them product for production into 2015. They don't need to invest in Sharp at this point. Besides they are about to launch a TV product and it might bring unwanted scrutiny from the FTC on owning a TV manufacturer if they bought 51% of Sharp.

[x86isslow]

Originally Posted by justperry

Apple should pay fair prices for their components, if that would be the case then companies like Sharp amongst others would not have to cut 1000s of jobs.
Pays unfair low prices for components, sells for a premium.
Yes, yes, I know that's how businesses work, but still.

So you're saying Sharp is doing poorly because they have a long term contract with Apple?

We all know the problem: The strong yen, the March 2011 earthquake and tsunami, and the Thai floods have made it impossible for the Japanese to compete against their more nimble rivals from South Korea.

[needfx]

smells like trouble

[Popeye206]

Interesting move by Samsung. Maybe little moves like this might wake the sleeping bear at Apple again???? I hope so.

[0815]

Originally Posted by Squilly

Don't see why Samsung would help a competitor.... even if it's due to financial issues.

They probably need some competition to be alive and somewhat healthy so that they don't get in trouble for having a monopoly and getting in potential trouble for being accused of abusing it.

Same way as it was back in the days a smart move of Microsoft to inject some money into failing Apple - they needed that competition to be alive and breathing to protect themselves from possible law suits.

[madsci954]

Originally Posted by notthedark

Picturing bald Samsung CEO sitting in a giant leather chair stroking a white cat.

Don't forget the monocle.

[justperry]

Originally Posted by x86isslow

So you're saying Sharp is doing poorly because they have a long term contract with Apple?

We all know the problem: The strong yen, the March 2011 earthquake and tsunami, and the Thai floods have made it impossible for the Japanese to compete against their more nimble rivals from South Korea.

Ok, fair enough, partly true then.
But Apple is known for getting the last drop out of the can.

[0815]

Originally Posted by furi0usbee

I don't understand why Apple doesn't take, say, a 30% stake in Sharp... done.

Yes, sounds like that would be a smart way of securing the access. But I guess Apple would rather have full control (owning the whole process) - wonder if they some day might use their cash to build (or buy) their own factories for all/most the parts they need.

[Applefanboy8153]

Apple's got 100 Billion dollars in reserves right? Well it's war! Buy out Samsung

LOL

[0815]

Originally Posted by needfx

smells like trouble

Why? 3% won't give them much say in it.

[jarred125]

Originally Posted by Applefanboy8153

Apple's got 100 Billion dollars in reserves right? Well it's war! Buy out Samsung

LOL

I don't think you know how this works. I don't know how it works, but I still think you know less.

[lazard]

Originally Posted by Applefanboy8153

Apple's got 100 Billion dollars in reserves right? Well it's war! Buy out Samsung

LOL

only $160 billion more to go

[szw-mapple fan]

Originally Posted by magamo

Apple is a customer of Sharp while Samsun is more of a competitor as another LCD screen manufacturer. Apple's suppliers like Foxconn may be interested in buying shares of Sharp. But Apple wouldn't benefit as much, especially when Sharp isn't financially healthy.

Yeah, but apple has, like, a 100+ biilion in cash right now. It wouldn't hurt to use a little of that cash to have more control over a major manufacturer.

[x86isslow]

Originally Posted by lazard

only $160 billion more to go

I'd rather see Apple buy out Einhorn and the other investment sharks and take the company nearly private so they don't have to deal with absurd pressures to sacrifice long-term success for short-term share prices.