Foxconn closed on its $3.81 billion deal to acquire Sharp Corp. after getting the green light from China’s anti-monopoly regulators, paving the way for the iPhone assembler to significantly grow its sales to Apple.
Foxconn handed over $3.81 billion to Sharp, according to The Wall Street Journal, in exchange for a 66 percent stake in the struggling Japanese company. Sharp CEO Kozo Takahashi stepped down and will be replaced by Tai-Jeng-wu, a top Foxconn executive.
The Taiwanese electronics vendor finally agreed to terms of the deal in March after initially committing to pay $6.2 billion for the same stake in Sharp. That offer was shelved after Foxconn reportedly discovered more than $3 billion in undisclosed liabilities.
The move marks a big win for Foxconn's crucial iPhone business. Last fall, Foxconn signed a letter of intent to buy a stake in Sharp's liquid crystal display business in a move that would have given the company control of Sharp's LCD unit, which produces some of the displays that go into the iPhone.
Displays are the most expensive single component in the iPhone by a wide margin. The Sharp acquisition will enable Foxconn to add displays to its offerings, providing a way to increase revenues from sales to Apple. It should also enable Apple to buy yet another component from Foxconn – a longtime partner – rather than looking to competitors such as LG or Samsung for iPhone displays.
Sharp also produces OLED displays. The price of such screens has decreased substantially in recent years, and Apple is said to be considering adding an OLED display to a new iPhone model next year.
The acquisition also may eventually enable Apple to lower manufacturing costs for the iPhone even as Foxconn’s sales to Apple ramp up. That may not necessarily result in cheaper iPhones in mature markets where users have few qualms about paying top dollar for Apple’s products, but it may allow Apple to lower the price of its phones and tablets in emerging markets where consumers are often more price-sensitive.
For more:
- see this Wall Street Journal report
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