Hon Hai Increases Ownership Share of Sharp; Takes Control of Sakai 10th gen Fab
January 10, 2017




Taiwan's Investment Commission has approved an application filed by a local investment firm owned by Guo Shou-cheng, the eldest son of Foxconn chairman Terry Guo, to indirectly invest over JPY52.14 billion (US$448.04 million) in Japan-based Sakai Display Products (SDP). The investment firm owned by the junior Guo will use the JPY52.14 billion fund to participate in a capital expansion project initiated by SIO International Holding, an overseas investment arm of the Foxconn Group, said the investment commission. SIO International will then take up 436,000 SDP shares for JPY17.17 billion from Sharp. Additionally, SIO will also invest the remaining JPY34.97 billion into SDP. Meanwhile, Sharp, in which Foxconn holds a 66% stake, has also announced that it has completed a deal with SIO international.


After the deal, Foxconn's stake in the Sakai plant through the presence of SIO has risen to 53.05% from 37.61%, while Sharp's stake in SDP has fallen to 26.71%, according to a statement issued by Sharp. The move by Foxconn to buy more SDP shares is aimed at taking a controlling stake in SDP's 10G production plant, which specializes in large TV panels. Foxconn is also investing in a 6th Gen fab in China to produce OLED displays. A joint venture between Hon Hai Precision Industry Co (2354.TW), known as Foxconn, and Sharp Corp (6753.T) plans to build a 61 billion yuan ($8.8 billion) factory in China to produce liquid-crystal displays (LCDs).


Sakai Display Products Corp's plant will be a so-called Gen-10.5 facility specializing in large-screen LCDs and will be operational by 2019, the company said at a signing event with local officials in Guangzhou on Friday. It said the plant will have capacity of 100K substrates/month, equating to 92 billion yuan a year. The heavy investment is aimed at increasing production to meet expected rising demand for large-screen televisions and monitors in Asia. Global LCD output was hit this year by the closure of a Samsung factory that accounted for 3 percent of the market, as well as factory stoppages in Taiwan after an earthquake in March. BOE Technology Group, began construction on its own Gen-10.5 plant in Hefei in December last year, with production scheduled to begin in 2018. In May Shenzhen China Optoelectronics Technology Co, a subsidiary of TCL Corp, announced that it would begin construction on a 50 billion yuan LCD plant in Shenzhen. Sakai Display Products Corp's plans for the Guangzhou plant come as Hon Hai seeks to turn the joint venture into a subsidiary, investing a total of 15.1 billion yuan in the company. The venture will also sell 436,000 shares for 17.1 billion yuan to an investment co-owned by Hon Hai Chairman Terry Gou, giving Hon Hai a 53 percent interest in the business and lowering Sharp’s stake from to 26 percent from 40 percent. 

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