Wednesday, 3 April 2013

Saving a Sinking Ship: Samsung Bails Struggling Sharp

Apparently, not only Google has a plan for world domination.

Samsung has bought a 3% stake worth $112 million to stave Sharp which is experiencing financial difficulties lately.

This move by Samsung is seen by analysts as adding fuel to the fire in the Samsung-Apple rivalry. Sharp supplies a third of Apple's display panels while most of Samsung's display panels are manufactured by affiliate Samsung Display Co.

It is interesting to note that last year, during the climax of the bitter Apple-Samsung Patent War, the Cupertino company distanced itself from the South Korean giant and started ordering parts for its iPads and iPhones from different suppliers.

With Samsung now a stakeholder of Sharp, more courtroom battles between Samsung and Apple can be expected more in the future.

Too, last year, Sharp accepted a $120 million investment from processor giant Qualcomm in a deal that cited that the two companies will collaborate in developing new power-saving screens for mobile phones based on Sharp's proprietary IGZO (indium gallium zinc oxide) display technology.

Sharp has seen better days since the company has suffered from the rise of the Japanese Yen and the shift of consumers from big television displays to more compact tablets and smartphones. The massive investments placed by Sharps on its television division failed to pay off. Major operating losses and retrenchment ensued.

Well, desperate times call for desperate measures. Accepting the bailout from Samsung, Reuters reported that Samsung will have "a smooth supply of large-sized TV panels and help bolster the Japanese company’s chances of survival."

While the two Asian companies have done business in the past, this deal is expected to further cement the business relationship between the two.

Without the Samsung acquisition, it has been predicted by business analysts that Sharp will see a painful $4.5 billion loss this year and further lay-offs for employees.

This move by Samsung will certainly not go unnoticed in Mountain View. Recent reports indicate that Google is worried about Samsung becoming too powerful and might renegotiate the Android arrangement of the two giants.


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