Sharp Considers Business Tie-Up with Intel
09/20/2012| 08:06pm US/Eastern
Sharp Corp. (>> Sharp Corporation) is considering forming a business tie-up with Intel Corp. (>> Intel Corporation) in the field of small and medium-size liquid crystal displays for smartphones and tablet computers, Kyodo News reported, citing company sources.
The move came as the cash-strapped Japanese company faces difficulty reaching an accord with its Taiwanese business partner Hon Hai Precision Industry Co. (>> Hon Hai Precision Industry Co., Ltd.) to revise the terms of their capital tie-up agreement due to differences in how to cooperate in the small and medium-size LCD business.
To receive financial aid from financial institutions, the Osaka-based consumer electronics maker plans to formally present them as early as next week a turnaround plan centering on cuts in personnel costs and boosting sales of its small and medium-size LCD panels for smartphones, sources close to the matter said.
The measures also include curtailing domestic production and sales of some overseas plants in order for the company to return to profitability with a group net profit of Y30 billion in the business year starting next April, the sources said.
Banks including main creditors Mizuho Corporate Bank and the Bank of Tokyo-Mitsubishi UFJ plan to provide loans totaling about Y360 billion, including some Y210 billion in fresh loans, the sources said.
Sharp has announced it will shed some 5,000 employees and save Y14 billion in personnel costs this business year by slashing wages and bonuses of executives and rank-and-file employees through next September. It also plans to cut wages of overseas employees.
In addition, the plan includes selling TV assembly plants in Mexico and China to Hon Hai and cutting 3,000 more workers, while reducing domestic TV assembly operations and scaling back the manufacture of solar batteries. It also considers selling U.S. solar power generation firm Recurrent Energy LLC, which it acquired in 2010.
The company also plans to unload real estate in the Tokyo metropolitan area and shareholdings, the sources said.
In the mobile phone business, the company plans to launch its smartphones in Southeast Asia.
To lift sales of its small and medium-size LCD panels that have low energy consumption and high picture quality, Sharp will explore ways to cooperate with other companies including Intel, which faces an uphill battle in its semiconductor business for smartphones.
Meanwhile, Sharp denied a news report that the company is holding talks with Intel to form a capital alliance.
Sharp logged its biggest group net loss of Y376 billion in fiscal 2011 ended in March this year, hit hard by a slump in its LCD television and panel sales. It also expects to remain in the red for this business year.
Due to steep falls in its share price, the company is holding talks with Hon Hai to review their capital tie-up agreement concluded in March, but there has been little progress.
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