TOKYO Dec 4 Qualcomm Inc will invest
as much as $120 million in Sharp Corp, a cash injection
likely to make it the struggling Japanese TV maker's biggest
shareholder, and to boost Sharp's efforts to remain viable.
As part of the agreement Qualcomm, through its Pixtronix
subsidiary, will work with Sharp - which supplies screens to
Apple Inc for its latest iPhone - to develop new
power-saving screens based on Sharp's IGZO technology, Sharp
The two firms will also consider collaborating in the
fabrication of chipsets.
Sharp's capital and business tie-up with the high-profile
U.S. chipmaker may help reassure investors worried about the
prospects of the debt-laden company that earlier this year
averted failure with a $4.4 billion bank bailout
"With this agreement Sharp will accelerate its strategy for
growth in small-to medium-sized LCDs," the Japanese company
The investment from Qualcomm will help Sharp bolster its
shareholder equity ratio, which at the end of September stood at
9.9 percent, half the 20 percent level usually considered the
minimum for financial stability.
Qualcomm will make an initial investment of 4.93 billion yen
($59.91 million) by the end of the year in a private placement
of stock at 164 yen per share, 10 yen less than Tuesday's
closing price. That will give the U.S. company a 2.64 percent
stake after dilution.
The timing and amount of the remaining investment has yet
to be decided and will be conditional on Sharp returning to
profit in the second half of the business year ending March 31.
Sharp, which posted a 168 billion yen operating loss in the
six months ending Sept. 30, forecast a loss of 155 billion yen
for the full 12 months, meaning an implied profit of 13 billion
for the second half. Achieving a profit would also allow its
banks, including Mitsubishi UFJ Financial Group and
Mizuho Financial Group, to justify their bailout.
Sharp had been expected to make Hon Hai Precision Industry
Co Ltd its biggest shareholder, adding to an earlier
agreement to sell the Taiwanese company a stake in its advanced
television LCD panel plant in Sakai, western Japan. That
agreement, however, unravelled as losses mounted at the maker of
Talks with Hon Hai to renegotiate its investment have since
stalled, but it may buy some of Sharp's overseas TV assembly
plants. The Sankei newspaper reported on Sunday that Hon Hai
plans to purchase three factories in China, Malaysia and Mexico
for $667 million.
Sharp's shares rose 1.2 percent to 174 yen in Tokyo after
the Nikkei business daily earlier reported the deal. That gain
compares with a 0.3 percent dip in the benchmark Nikkei 225