Electronics maker Sharp has accepted a $6.25 billion (700 billion Japanese yen) takeover bid from Foxconn, although the deal is now on hold. The $6.25 billion figure includes liabilities:
Ailing electronics maker Sharp has accepted a takeover bid from Foxconn, the company that assembles iPhones. After the deal was announced, Sharp's stock fell more than 14 percent. And Foxconn now says it will postpone finalizing the sale due to late-arriving information.
Thursday night local time, Foxconn issued a statement in Taiwan saying that it will now delay signing the deal, because of a document that Sharp shared with it on Wednesday, according to Focus Taiwan News, which adds that the sale was previously planned to be finalized by the end of this month.
[...] The Japan Times says the proposed deal would mean the loss of one of the country's crown jewels, calling it "the largest-ever acquisition of a Japanese electronics maker by a foreign company."
[cont..]
Sharp's hidden debts may be the cause of the deal's pause:
It was unclear exactly what the disclosures were or whether they posed a significant threat to the deal. But their emergence at the last moment, and Foxconn's decision to hit the brakes in response, raises questions about what might be lurking in Sharp's books. "Maybe Foxconn found something they didn't like, or maybe there's just a lot to go through," said Nicholas Benes, a Tokyo-based specialist in Japanese corporate governance.
The takeover would put Foxconn in a better position by allowing it to manufacture screens for the iPhone and other devices:
Foxconn doesn't make displays. But Sharp does. So do LG, Samsung, and other electronics companies, some of whom make Android devices that compete with the iPhone. By acquiring Sharp, Foxconn could earn an even larger portion of the overall bill of materials for the iPhone. Apple would also benefit from the deal because it could buy iPhone screens from a partner, rather than a competitor like LG, from whom it currently buys screens. It might also be able to buy the displays for less than what LG or Samsung would charge for them, because of bulk purchasing benefits from Foxconn.
Foxconn is also known as Hon Hai Precision Industry Co., Ltd.
Related: Sharp Announces 5.5" 4K Screen
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Sharp has announced its intention to manufacture the world's sharpest display, a 5.5" IGZO screen with a 4K/UHD 3840x2160 resolution (806 pixels per inch), for some 2016 smartphones. Is 806 PPI too much? Tom's Hardware notes the drawbacks while celebrating the new milestone:
Although devices that are 1440p or even 4K will look even more stunning, there are indeed diminishing returns benefits-wise as the cost, the power consumption, or the GPU resources required to handle such high resolutions are significantly higher than the previous generations.
That's not to say that a 4K display today will necessarily cost more than a 1440p display did last year, but it does cost significantly more than a 1440p display being sold this year. Although the price ratios for components may remain relatively the same for the new technologies inside a new smartphone, if the benefits are increasingly smaller, then there's an opportunity cost, as well.
For instance, the extra cost to get a 4K display over a 1440p display this year could be used instead towards improving the device's camera. (OEMs could use a sharper lens, a larger sensor, improved OIS, and so on.) This sort of balance should always be taken into consideration.
[...] That doesn't mean higher resolution displays in smartphones are not useful. However, they could be even more useful for other applications; for example, 4K displays are ideal for VR. In order to have a VR experience that makes you completely forget you have a screen in front of your eyes, you'll need at least a 4K resolution screen.
Higher-resolution displays will also help lower the cost of lower resolution panels.
Foxconn will take over the electronics maker Sharp for about 20% less than it was willing to pay previously.
Chinese iPhone assembler Foxconn is to swallow Japanese monitor biz Sharp for ¥389bn (£2.5bn) – around £625m less than it had previously been willing to cough up. Under the terms of the deal, Foxconn's daddy Hon Hai will gain a controlling stake of 66 per cent in Sharp.
The takeover beat a proposal by the Japanese government to bail out the ailing company with a state-backed fund. According to the Japan Times, Sharp is expected to report a loss of ¥200bn (£1.2bn) for its fiscal year 2015. Last month the long-awaited merger was put on hold after the Japanese outfit passed new info to Foxconn, reported to show a 300 billion yen ($2.7bn) liability in its accounts.
Also at BBC, NYT, and Reuters.
For years, iPhones (or their boxes) have said that they were "designed by Apple in California. Assembled in China." But thanks to an escalating trade war between the US and China, that might not be true in the coming years. Reuters reports that two of Apple's biggest manufacturing contractors, Foxconn and Pegatron, are working to expand their facilities in Mexico with an eye toward eventually building iPhones there.
[...] This isn't Foxconn's only effort to diversify away from China. Last year, Foxconn announced plans to begin manufacturing iPhones in India, and the company is now manufacturing the iPhone SE there.
Sources told Reuters that Taiwan-based iPhone contractor Pegatron is also considering a shift to Mexico, but few details about its plans are known.
Previously:
The New York Times (may be pay-walled) reports that Terry Gou, the CEO of Foxconn has confirmed rumours aired in December to the effect that the company is considering building an additional factory in the United States. Yahoo Finance UK says that the factory, if built, "could create about 30,000-50,000 jobs." The South China Morning Post reports that the facility, expected to cost more than $7 billion, would make dot-matrix displays (such as used in television sets and mobile phones) under the Sharp name. Mr. Gou remarked that:
While it is difficult to have a clear analysis of the economic outlook for this year, due to looming uncertainties, three factors can be seen as clues. First, the rise of protectionism is inevitable. Secondly, the trend of politics serving the economy is clearly defined, and thirdly, the proportion of real economy is getting increasingly bigger.
Speaking in November, Gou had called on the incoming U.S. leaders to refrain from protectionist policies, The China Post had reported.
Additional coverage:
Related:
Foxconn Plans to Replace Nearly All Human Workers With Robots in Some Factories
Foxconn Acquires Sharp at a Lower Price Than Previously Agreed
Sharp Accepts $6.25 Billion Takeover Bid from Foxconn, but Foxconn is Wary of Debt
Softbank to Invest $50 Billion in the US
(Score: 2) by Joe Desertrat on Saturday February 27 2016, @01:37AM
The Japan Times says the proposed deal would mean the loss of one of the country's crown jewels, calling it "the largest-ever acquisition of a Japanese electronics maker by a foreign company."
At least the Japanese still have RCA.
(Score: 0) by Anonymous Coward on Saturday February 27 2016, @03:02AM
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(Score: 0) by Anonymous Coward on Saturday February 27 2016, @09:22AM
on suicide nets!