* Sharp shares extend gains to 6 pct
* Hon Hai's Gou: Sharp alliance will beat Samsung
By Clare Jim
TAIPEI, June 18 Hon Hai Precision Industry
, the main supplier of Apple Inc, is in talks
with Sharp Corp about increasing its stake as it bets
on the Japanese firm's leading edge technology to give it a
boost in the cut-throat display panel business.
Sharp's shares extended gains to over 6 percent after Hon
Hai chairman and founder Terry Gou told the company's annual
meeting in Taiwan on Monday that the talks come after a recent
steep fall in Sharp's share price.
Hon Hai agreed in March to buy new shares in Sharp worth
$844 million as part of a tie-up in liquid crystal display
Gou also said he plans to list a Sharp LCD plant in Japan on
the Taiwan stock exchange within three years, saying the plant's
advanced technology was better than that of arch-rival Samsung
"I'm proud to say the cooperation with Sharp will let us
beat Samsung in terms of clearness - high resolution," Gou told
"When we bought, Sharp's shares were 550 yen, now it is 400
something. It's been dragged by the macro environment. We have
already sent delegates there to see if we can buy more shares."
Gou took a 46.48 percent stake in Sharp's loss-making Sakai
LCD plant with his own money as part of the deal to buy into
Sharp. He said on Monday its capacity would soon be used up, so
he expected to inject more capital to expand it.
"I invested in the Sakai 10th generation plant in my own
name because some investors were concerned about investing in
panels, that it might not be a good business," he said.
"The Sakai plant has an exclusive agreement with Corning
on large panel supply; so our competitors won't be able
to secure any glass even if they want it."
Losses at the underutilised Sakai facility resulting from a
global oversupply of panels and weak demand left Sharp with a
net loss of 376 billion yen ($4.73 billion) in the year ended
Sharp was hit hard last year by a glut in supplies of LCD
panels and weak demand for TVs, prompting it to tie up with Hon
Hai in a bid to utilise idle production capacity. The alliance
is also an opportunity for Hon Hai to tap the manufacturing
expertise of Japan's leading panel maker.
For Hon Hai the alliance with Sharp could open the way for
it to push for orders for Apple's much-anticipated Apple TV.
Hon Hai shares ended up 2.37 percent in a broader market
up 1.76 percent.