* Sharp, CEC to invest $2.9 billion into LCD joint venture
* Joint venture to set up, operate LCD plant in Nanjing
* One of highest-profile deals since China-Japan tensions
By Mari Saito
TOKYO, June 27 Japan's Sharp Corp, a
leading suppler of displays to Apple Inc, said Thursday
it will form a $2.9 billion alliance with state-owned China
Electronics Corp that includes an agreement by Sharp
to license its advanced power-saving IGZO screen technology.
The new venture will be 92 percent owned by China
Electronics, also known as CEC, which supplies equipment to
China's military. The venture will set up a an LCD plant with
the goal of mass-producing panel displays for televisions,
notebook PCs and tablets in 2015.
Licensing IGZO, or indium gallium zinc oxide displays, fits
into a strategy by cash-strapped Sharp to leverage its
technology to bolster its finances. Sharp, in December, signed a
pact with Qualcomm Inc, selling the U.S. company an
equity stake for $120 million and agreeing to develop new
screens based on IGZO technology.
IGZO screens boast power consumption as low as a tenth of
conventional LCDs, high resolutions and faster reaction speeds.
While an agreement to license the technology to a Chinese
military-linked state company may raise eyebrows, Sharp does not
exclusively own the technology, only being the first to
The agreement, which is a revised version of one agreed to
with CEC in 2009, may instead represent a retreat by the Chinese
company to win access to Sharp's more advanced tenth-generation
LCD manufacturing techniques. CEC is planning to build an 8.5
Sharp is the only panel maker in the world to have built a
tenth generation factory able to fabricate liquid crystal
sandwiched in glass sheets thinner than a credit card that are
3.13 metres long by 2.88 meters wide. Smaller 8.5 generation
sheets measure 2.2 metres by 2.5 metres.
CEC in November blamed deteriorating ties between Japan and
China over their territorial spat in the East China Sea for
shelving cooperation with Sharp to build a tenth-generation
facility. Sharp, which sold a stake in its advanced LCD plant to
Taiwan's Hon Hai Precision Industry last year, says no
such agreement ever existed.
Thursday's deal, including the construction of the 8.5
generation factory in Nanjing, represents one of the
highest-profile transactions between a Chinese and Japanese
company since tensions flared last year over a chain of disputed
islands known as the Senkakus in Japan and the Diaoyu in China.
A Sharp spokesman declined to say how much in royalties the
company expected to receive for the technology transfer. A
portion of those proceeds will be used to fund Sharp's 8 percent
stake in the joint venture, the spokesman said.
The new joint-venture will represent a total investment of
$2.9 billion for Sharp, which was rescued in October by its
banks. To rebuild its business, Sharp has also sought closer
ties to Samsung Electronics, selling it a 3 percent
stake for $103 million and pledging to supply it with small