Terry Gou, founder and chairman of Taiwan-based manufacturing giant Hon Hai Precision Industry Co. (Foxconn), has raised his stake in the Sakai Display Products (SDP) to more than 50 percent, essentially turning the LCD screen joint venture with Sharp into a subsidiary.
Sharp has sold sold 436,000 shares in Sakai Display Products Corp to SIO International Holdings Limited -- a company owned by Hon Hai chief Terry Gou -- at 17.17 billion yen (US$147 million). Following the transaction, Sharp's stake in SDP is just 26.71 percent
With the move, Hon Hai's chairman plans to to enhance his company's competitive edge and take on South Korean giant Samsung.
Sharp said it would book a profit of about 234 million yen from the disposal of the stake in the Sakai plant during the October-to-December period.
The 10th-generation LCD Sakai plant specializes in manufacturing large panels for TVs. By taking advantage of the closer ties with Sharp in flat-panel production, Hon Hai seeks to boost its competitive edge to take on South Korea's Samsung Electronics in the global flat-screen market.
Sakai Display plans to stop supplying large LCD panels to Samsung, its biggest customer, and such other outside clients as China's Hisense group by the end of 2017. It will focus resources on making screens for Sharp, which is working to bolster sales.
Taiwan's Investment Commission has already approved an application filed by a local investment firm owned by Gou's eldest son - Gou Shou-cheng - to put 17.1 billion yen into his father's SIO to gain a stake in the Sakai plant. In addition, the younger Gou received approval from the Investment Commission to spend an additional 34.97 billion yen to engage in flat-panel marketing for the Sakai plant.
Hon Hai completed the acquisition of the 66 percent stake in financially troubled Sharp in the middle of August for US$3.5 billion.
Sharp is likely to become profitable in the current quarter, ending a nine-quarter losing steak.