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 Sharp said Foxconn Vice Chairman Tai Jeng-wu will succeed Kozo
Takahashi, becoming the first outsider to lead the century-old firm
that began making belt buckles and mechanical pencils.
The change marks a new chapter for Sharp which has struggled to
remain competitive even after two massive bank bailouts. The firm
and its Japanese peers have been out-manoeuvred by upstart Asian
rivals, with companies once synonymous with cutting-edge electronics
such as Sony Corp losing cache.
For Sharp, a revival beckons under the leadership of Tai, a 30-year
veteran of Foxconn, the world's largest contract electronics
manufacturer. Tai has extensive experience running Foxconn's
Shenzhen operations and played a central role in the stake
negotiations, people at Foxconn told Reuters.
"Tai is No. 2 at Hon Hai. He speaks Japanese. He was selected from a
comprehensive perspective," Takahashi said at an earnings briefing,
referring to Foxconn by its formal name, Hon Hai Precision Industry
Co.
Tai will be one of nine new board members, Takahashi said.
He also said Sharp aims to finalize the sale of a two-thirds stake
to Foxconn by the end of June, ahead of their initial Oct. 5
deadline.
Sharp shares closed down 0.8 percent before the announcement whereas
the Nikkei benchmark index rose 0.4 percent.
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Sharp will get a boost from a takeover that would vastly expand
sales channels for its displays. In return, Foxconn will gain
control of Sharp's advanced display technology and strengthen its
pricing power with Apple Inc, a major client of both companies.
Foxconn's display-making affiliate Innolux Corp will also benefit
from cooperation with Sharp, Innolux's chairman said separately on
Thursday. He also announced his resignation to take an as-yet
undetermined role at Sharp.
Even with Foxconn's support, however, Sharp will still have
difficulty competing, especially as Chinese display makers have been
aggressively expanding capacity, analysts said.
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Sharp also lags South Korean rivals in organic light-emitting diode
(OLED) technology, which Apple is widely expected to adopt for
future versions of its iPhone devices.
But Foxconn chief Terry Gou has expressed preference for Sharp's
strength in indium gallium zinc oxide (IGZO) technology.
"IGZO is Sharp's pride," said Innolux Chairman H.C. Tuan. "I am
hopeful we can cooperate with Sharp in this area."
Still, Sharp's Takahashi said over-reliance on smartphones was one
reason for deteriorating earnings.
"We've failed to move fast enough" to shift focus to larger panels,
Takahashi said at the briefing.
Sharp reported a second consecutive annual operating loss of 162
billion yen ($1.5 billion) for the business year ended March, more
than triple the loss of the year earlier.
Continued focus on smartphones does not bode well after Apple
reported its first ever decline in iPhone sales in January-March,
and iPhone assembler Foxconn reported an 8.5 percent decline in
sales in April.
Foxconn subsidiary FIH Mobile Ltd, whose clients include Sony and
Xiaomi Inc [XTC.UL], also said earlier this month that its
first-half profit may fall as much as 92 percent as smartphone sales
growth slows to a single digit this year.
(Reporting by Makiko Yamazaki in TOKYO and J.R. Wu in TAIPEI;
Additional reporting by Junko Fujita; Editing by Christopher
Cushing)
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