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Samsung Electronics and its group companies are expected to become the fifth largest shareholder of Sharp and the largest shareholder except financial institutions. For the first time, capital cooperation between Japanese and Korean electronics companies, which have been fiercely competing in the fields of television and semiconductors.
Earlier, Sharp reached an agreement with Hon Hai in March 2012 to contribute 9.9%. However, due to the sharp fall in Sharp's stock price, Hon Hai asked for a renegotiation of funding conditions, but the negotiations between the two sides were difficult. Hon Hai’s March 26 deadline for Sharp’s capital contribution is approaching, and the funding is likely to end.
In the current liquid crystal display device market, due to fierce competition, the price of related products has fallen, and Sharp suffers from it. After Sharp and Samsung reached the deal, they will give priority to the latter to provide the LCD screen produced by the Kameyama Manufacturing Plant. At present, a large number of display equipment of the factory is sold to Samsung's main competitor, Apple. It is reported that through this transaction, Samsung can avoid the increase of huge investment and achieve the purpose of expanding production capacity.
In addition, due to the dilemma of liquid crystal panels and solar cells, it is expected that the final profit and loss of Sharp's 2012 fiscal year (April, April - March 2012) will be a loss of 450 billion yen, and a huge loss will be accrued for two consecutive fiscal years. Through measures such as layoffs, Sharp’s operating profit and loss was turned into profit in five quarters from October to December 2012. However, the capital adequacy ratio has fallen to 9.6% as of the end of December last year, and enriching capital has become a top priority.
In December 2012, Sharp and US semiconductor giant Qualcomm reached an agreement to receive up to 10 billion yen in capital injection and jointly develop a new generation of panels for tablet computers. If the cooperation with Samsung is taken as an opportunity to improve performance, capital enhancement measures, including public offerings, will be easier to achieve.
Samsung or acquires 3% stake in Sharp to break the competition pattern of Japanese and Korean companies
It is reported that Samsung will invest 10 billion yen (about 108 million US dollars) to acquire Sharp's 3% stake, and further penetrate into the field of smartphone and tablet display. The two sides are expected to officially announce the deal as early as March 6.