Japan's Sharp to get cash injection from Qualcomm
TOKYO, Japan - Cash-strapped Japanese electronics giant Sharp said Tuesday, December 4, it had struck a capital injection deal with US-based chipmaker Qualcomm as it moves to repair its tattered balance sheet.
The 9.9 billion yen (US$121 million) investment follows earlier reports that Sharp, which is suffering heavy losses, has also been talking to other US tech giants, including Intel and Dell, about a possible investment.
The Qualcomm deal would see the pair jointly develop energy-efficient liquid crystal display (LCD) panels for smartphones using the Japanese firm's technology, with the US company initially getting about 2.64% of Sharp's stock, based on 4.9 billion yen worth of shares.
The remainder of the investment would be paid as the joint venture progresses, Sharp said.
Sharp shares got a boost from earlier reports of the Qualcomm deal, with the embattled stock rising 1.16% to 174 yen in Tokyo on Tuesday.
"We positioned mid-sized and small LCD panels as our growth engine as we are competitive in that technology," Sharp said in a statement.
"The market for smartphones and tablets, the target for the mid-sized and small LCD panels, are expected to require higher picture quality and energy-efficiency as the market expands," it added.
Sharp has suffered a series of credit rating downgrades and warned it expects to lose about $5.6 billion in the fiscal year to March 2013.
The Osaka-based maker of Aquos brand electronics has announced thousands of job losses while cutting wages for employees -- from the factory floor to the executive boardroom -- and selling real-estate to shore up its balance sheet.
Earlier this year, Sharp said it had reached a capital injection deal worth about $800 million with Taiwan's Hon Hai Precision, which makes Apple gadgets in China, but the deal stalled as Sharp's share price nosedived.
Japan's battered electronics sector has suffered from a myriad of problems including a high yen, slowing demand in key export markets, fierce overseas competition and strategic mistakes that left its finances in ruins. - Agence France-Presse