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
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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.
Joining a $2.9 billion alliance with China Electronics Corp
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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
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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 commercialize it.
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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 generation facility.
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.
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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.
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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.
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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.
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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 display screens.
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Reuters
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