Foxconn attempts to takeover Sharp Corporation

This week, Hon Hai Precision Industry Co., Ltd. (trading under the name of Foxconn Technology Group) made a last-ditch bid to purchase two-thirds of Sharp Corporation (66 per cent of Sharp’s voting stock), a multinational manufacturing company in Japan that produces displays for products such as televisions, computer monitors and handheld mobile devices.

Foxconn, which is one of the largest manufacturers of electronic goods in the world and the central supplier to Apple Inc. (APPL O) has manufacturing plants located worldwide. Some of the largest of these plants are located in China. Sharp announced Thursday that they had accepted a bid estimated at US $6.24 billion (JP¥700 billion yen) from Foxconn, doubling the amount initially estimated by market experts and the bid from rival Innovations Corp. The deal, which would effectively merge Foxconn’s display technology brand, Innolux, with the ailing Sharp, was stalled after new information on previously unrevealed liabilities totaling around $2.7 billion (JP¥300 billion yen) was given by the display manufacturer.

Foxconn employees/ Bloomburg.org

Foxconn employees/ Bloomburg.org

Foxconn is no stranger to signing major contracts with multinational electronics corporations. Along with Apple Inc., Foxconn has secured past deals with large names such as Google, Amazon.com, Dell, and Sony, to name a few. The largest purchase by the technology group was a $9.9 billion deal with Chi Mei Optoelectronics, closed in early 2010, with promises to merge Foxconn’s trademark brand Innolux Display with Chi Mei’s flat-panel screen technology. Combined with the purchase of a smaller display panel company, TPO Displays, the merger was expected to result in a refreshed business prototype for Innolux, to great disappointment. Innolux has lost a vast amount of worth since, dropping a massive 80 per cent for shareholders in the last five years.

Financial Times reports that Foxconn chariman Terry Guo said, “we don’t want to be Taiwan’s number 1 [flat-panel] player… right now in TVs, we don’t make any money from panels. We make money from connectors and supply chain management.”

In addition to being one of the major name suppliers for major electronics companies, Foxconn also carries a controversial history in regards to employee treatment, particularly in their factories located in China (of which there are twelve in a total of nine cities). In 2010, Foxconn gained media attention when a string of horrific attempted and completed suicides by factory employees sparked international investigation by contractually linked electronics companies Apple Inc. and Hewlett-Packard. Within the span of that singular year, an estimated eighteen suicides by factory workers living and being employed in deplorable environmental conditions were attempted, fourteen of which resulted in deaths.

Most of these attempts were as a result of falls from the factory buildings, prompting Foxconn to install a series of “nets” surrounding each building to prevent jumpers from completing a suicide attempt. A BBC-produced documentary released in 2015, Apple’s Broken Promises, had reporter Richard Bilton undercover to expose working conditions in Indonesian and Chinese locations for Foxconn, revealing workers in extremely cramped dormitories and out on the production floor with little to no sleep. Outside of the factory, Foxconn’s workers in Indonesian tin depositories were filmed working in unsafe conditions, often handling toxic and harsh substances without any protective working gear, resulting inthe illness of several workers.

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Sharp Corporation, headquartered in Osaka, Japan, is known as the tenth-largest television manufacturer in the world as of 2013. Despite their advances in technology, however, such as working on a robotics-powered cell phone prototype and introducing the world’s first 8K resolution technology television, Sharp has also been known by shareholders as a ship that is sinking rapidly. In July 2015, Sharp sold their Mexico factory location to Chinese electronics company Hisense for $23.7 million, effectively solidifying their disappearance from all North and South American television markets. This comes after being known as one of the world’s leading manufacturers of LCD-technology products. Regardless of this market disappearance from the Americas, Sharp continues to be the leading manufacturer of televisions in Japan.

Foxconn’s takeover bid for Sharp comes as no surprise to sources in the industry. Foxconn founder and Chairman Terry Gou has been attempting to attract Sharp into a deal for the last five years, presumably in an attempt to strengthen their contractual deal with Apple Inc. Sharp would effectively be able to mass produce organic light-emitting diode (OLED) display screen technology by 2018, which coincides with Apple’s timeline of plans to incorporate OLED technology into device screens. OLED is a lighter and more flexible type of technology has now been introduced into many devices, including LG’s extraordinarily thin and curved OLED smart television displays. This could encourage Apple’s abilities to gradually detach from supplier Samsung Electronics Co., who also serves as a well-known rival in the mobile electronics industry.

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