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Major Electronics Producer Sharp Forms Capital Alliance with Korea’s Samsung

Japanese electronics maker Sharp has in recent years seen a slump in sales. What is arguably required for the company to remain afloat in this tough consumer market  is a change in business strategies. As one of Japan’s most renowned sellers of liquid crystal displays, Sharp is hastily searching for ways to revamp its administration.

First there was talk of a possible alliance between Sharp and Taiwanese major electronic company Hon Hai Precision Industry Co., Ltd. However, coming to a deadlock in investment negotiations, Sharp changed course by forming an alliance with a company that was arguably up until now its biggest competitor on the market, South Korea’s Samsung Electronics Co. It was announced this week that a capital alliance between the two companies is in its final stages of negotiation.

In March of last year, Sharp looked ready to form a tie-up with Hon Hai Precision Co., Ltd, on the basis of an investment offer of around $60 billion. However, what saw all this come to a halt were the discrepancies between companies during the negotiation process itself.  According to authorized members in the field, under these pushed circumstances Sharp found itself accepting a $10 billion investment from Samsung Electronics Co.

This most recent negotiation includes plans for Sharp to provide LCD panels to Samsung on a long-term scale. Sharp also hopes to be able to offset some of its debts whilst increasing its LCD factory production rates. Through securing a solid supply of screens, Samsung is also looking  to reduce its own research costs.

Up until now, Sharp has seen negotiations involving  a number of joint alliances and investments from foreign companies. Nevertheless, teaming up with a serious competitor in one’s main field of business, like Samsung, is a first and it is clearly something that has left Sharp looking at just how to restructure itself on the long term business scale.

Source: NHK

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