Apple's super supplier Foxconn just became more valuable with their successful acquisition of Sharp, a company that they've been pursuing since 2012. In a rare case of Japan relinquishing a venerated brand to a foreign buyer, Sharp Corporation's board approved a plan Thursday for the Foxconn Technology Group to take over the company for $US$6.24 billion.
The Wall Street Journal (WSJ) notes that "An iPhone's most expensive component is its touch screen display, making up more than 20% of manufacturing costs, which is why Mr. Gou is eager to supply them. Sharp is one of three suppliers of iPhone screens.
Foxconn's move for Sharp comes as it seeks to be a supplier of next-generation iPhone screens to compete with Samsung Display Co., according to people familiar with the matter.
Samsung makes 95% of the world's supply of organic light emitting displays, which are thinner, brighter and can make devices more flexible, according to Beijing-based display research firm Sigma Intell. Apple plans to introduce OLED displays into iPhones as early as next year, but doesn't want to be solely reliant on Samsung for supply, said a person familiar with Apple's product road map." For more on this read the full WSJ report.
Earlier this month Foxconn provided photos taken inside a meeting room at Sharp's headquarters that showed Mr. Gou and Sharp President Kozo Takahashi shaking hands and beaming, as noted in our cover graphic, as they signed various documents related to the deal in-the-making.
UPDATE 1: At around 3 a.m. the Wall Street Journal tweeted that the Sharp deal may be on hold as noted below.
UPDATE 2: 6 a.m. The Following is from the Wall Street Journal's Follow-Up report:
"Foxconn Technology Group said Thursday it is delaying the signing of a definitive takeover agreement with Sharp Corp. due to new details that the Japanese electronics maker disclosed a day earlier.
Foxconn didn’t elaborate in its statement, but people familiar with the matter said that the Taiwanese iPhone assembler is putting the Sharp deal on hold after reviewing the Japanese firm’s future financial risk. The people said Foxconn received a list of about ¥350 billion yen worth of “contingent liabilities” from Sharp on Wednesday.
Contingent liabilities are costs that a company might face in the future, based on the outcome of lawsuits, accounting changes, supply contracts or other uncertainties. The people said Foxconn is reviewing the 100-item list and the company hasn’t given up on the deal.
“We already notified Sharp on the same day [before Sharp held its board meeting on Thursday] that our side had to clarify the contents," Foxconn said in its statement. "We have to postpone the signing before both sides can reach an agreement. We hope to clarify it quickly and to bring this deal to a successful conclusion.'"