Samsung invests €84m in Sharp LCDs

Samsung is to invest 10.4 billion yen (€84.4m) in Sharp to secure a supply of large-size LCD panels.

The agreement gives the South Korean company a 3% stake in Japan’s Sharp and a supply of LCD panels for televisions. Samsung said in a statement that the investment will help strengthen Sharp’s LCD panel business.

The South Korean company, known for its Galaxy smartphones and tablets, said it will not be involved in Sharp’s management.

The alliance is a boost for the troubled Japanese company which has been seeking to raise capital as part of turnaround plans. The maker of Igzo display panels and Aquos TVs has struggled to stay afloat as competition from South Korean and Chinese TV makers squeezes Japanese manufacturers and their ability to make the big capital investments needed in the hyper-competitive LCD industry.

Sharp has been in talks with Taiwan-based Hon Hai Precision Industry, also known as Foxconn, to raise capital but no deal has been reached. Sharp announced in December a 9.9 billion yen (€81m) investment from Qualcomm to jointly develop new display technology.

Sharp has LCD panel factories in Kameyama and Sakai in Japan and produces small and medium-sized panels for smartphones as well as large panels for TVs.

The deal with Samsung helps Sharp ramp up its display panel production. Sharp’s panel clients include Samsung’s rival Apple, while the South Korea company gets most of its panel supply from its affiliate Samsung Display.

Sharp forecasts a record 450 billion yen (€3.7bn) loss for its business year through to March and has struggled to cut costs and reshape its business, partly because it has invested in expensive plants in Japan that make panels for which prices have fallen sharply overseas.

The plants embody Sharp’s prized technology, but they also make the company hostage to the yen’s swings.

The agreement is the latest investment in Japanese firms by Samsung, which sits on a stockpile of cash and has strong overseas buying power because of the won’s rise. In January, it acquired a 5% stake in Wacom, a Japanese firm with digital pen technology.