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Why is Foxconn Pushing Sharp back into the Smartphone Market so Aggressively?



In March Patently Apple posted a report titled "Politics Likely Played a Role in Softbank's Decision to Back Off their Investment in a new Apple Rival Led by Andy Rubin." Softbank was about to back an emerging smartphone company by the name of 'Essential' led by Andy Rubin, Android's architect, when they pulled out of the deal at the last minute "partly because of the Japanese investor's increasingly close relationship with Apple Inc.," reported the Wall Street Journal. Yet the Wall Street Journal's report didn't say that Foxconn was pulling out specifically. Foxconn was trying to gain the manufacturing business for this new smartphone that will be a new competitor to Apple, their number one customer.


On April 16 Patently Apple posted a report titled "What's the Game Plan for the Ever Aggressive Foxconn? In that report we covered a Nikkei report that Foxconn/Sharp was mulling re-entry into the PC Market under the Sharp brand. Sharp's President Tai Jeng-wu added that they had no plans of restarting its smartphone business.


I noted in the report that if Foxconn would be willing to get Sharp back into the dying PC business, why wouldn't they consider the smartphone business?


Today the Chinese-language Economic Daily News is reporting that Sharp aims to ship one million smartphones this year. The report notes that "Sharp has revamped its strategy for smartphones and aims to ship over one million smartphones in fiscal 2017."


This news is on the heels of our report that Sharp was getting their OLED fab for smartphone displays up to speed. It would now appear that the race to get their OLED plant up and running wasn't for Apple but rather for their own smartphones, something that Sharp's president just recently stated they wouldn't do. Either the Nikkei is completely unreliable as a source or there's a deceptive game playing out.


Today's report further states that "Sharp has also decided to market its flagship family products under a single "Aquos R" brand in the Japan market, replacing the previous brands of Aquos Zeta, Aquos Serie and Aquos Xx used by different distributors."


The report further noted that "To stage a comeback in the China market, Sharp has recently recruited Lou Zhongsheng, former vice president of the Coolpad Group, to head its smartphone business unit in China. Sharp has been absent from China's smartphone market for four years.


Sharp also plans to start selling its smartphones in Europe in 2018 through one of its subsidiaries, the paper added.


In Taiwan, Sharp recently launched its Sharp Z3 smartphone, targeting the mid-range segment. The Sharp Z3 features a 5.2-inch 2K display which can deliver a brightness of up to 520nits and is priced at NT$13,990 (US$461) unlocked."


With Foxconn likely still backing the upcoming Essential smartphone while making a huge push into the OLED market and pushing Sharp back into the smartphone business, especially in China, what are we missing here?


Is Foxconn going to test out Sharp's new OLED's in the market first to prove to Apple that they have the expertise and volume to satisfy their future needs? Is Foxconn out to hurt Samsung their mortal enemy?


Even Foxconn's bid for Toshiba is confused in the press. First Reuters and Bloomberg reported that Foxconn could make a deal for Toshiba with Apple. Then earlier this week the Nikkei reported that Foxconn eyed involving Sharp in Toshiba bid while seeking Softbank's Chairman for assistance in the bidding war as well. Their original bid was with TSMC.


The basic thinking was that a Foxconn victory in gaining Toshiba would be a direct gain for Apple so that they wouldn't have to rely on Samsung so heavily. But a Toshiba victory for Foxconn could now be seen as a strategic move to support both Sharp's push back into the smartphone market in addition to supporting Essential which is likely to be a Samsung competitor in the Android market in the U.S.


For 2017, Foxconn has been one of the most aggressive tech companies on the planet attacking multiple market fronts at lightning speed and Toshiba is only their latest known move. We assume and hope that Apple's number one supplier is working to help Apple move away from Samsung on many fronts so that their relationship will only get stronger. And yet, some of their moves are questionable without having a context. Do we cheer Foxconn on or do we begin to question their alliance with Apple?


Unfortunately that can't be answered today because it's an ongoing story that's still unfolding and something tells me that there's a lot more news from Foxconn still to come in the coming months ahead.


Like a good tension-filled TV series like 24, the story is one of the most fascinating in the tech sector to date with each episode building towards an end that we yet don't understand. The pieces of the story are purposely scrambled to keep us guessing.


Yet the one nagging question that keeps popping up is why has Foxconn pushing Sharp back into the smartphone business so aggressively?


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