The market surrounding electronics industry is becoming severe, with rapid price decline due to the development of digital technology and increasing competition in a global market. We believe the timely action is necessary to tackle these changes in the market.
Looking at the business environment, Hon Hai Precision Industry, the key company of Hon Hai group, saw Sharp's LCD technology with high reputation, and decided to procure ultimately up to 50% of large-size LCD panels and LCD modules manufactured at the LCD panel plant in Sakai-city, Osaka, Japan. The LCD panel plant will be mutually managed by one company set by partner companies.
In addition, this partnership allows each company to establish a new business model, combining each company's strength, to launch cost competitive component and products fit to market demand by utilizing Sharp's potential for the development of one-of-a-kind components and products with Hon Hai group's mounting technology and cost competitiveness.
Sharp plans to enhance this partnership by broadening the collaboration field, to allocate funds received from Hon Hai group by the issuance of new shares through third-party allotment, to the investment for the new technology introduction, to increase mid-and long- term profitability, and to strengthen competitive edge in the global market.
Apple has been working with Sharp in regards to its display technology and Foxconn is a key manufacturer of Apple products, so this partnership is seen as beneficial to the Cupertino company.