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Struggline Display Maker Sharp Expands Supply Deal with Samsung

14 May 2013

Japan’s Sharp Corp. has laid out its plans to supply rival Samsung Corp. with displays after suffering a $5.4 billion loss in its latest fiscal year.

Earlier this year, Sharp agreed to supply Samsung, a leading rival in the smartphone, PC and tablet display market, with small screens for smartphones and other mobile devices. Now that plan has expanded in volume. Sharp said it plans to double to two-thirds the portion of panels produced for customers such as Samsung and Apple, according to Reuters.

Sharp took big write-offs last year after its focus on making screens for its own struggling TV business left it with excess capacity.

The alliance illustrates just how much the market for liquid crystal displays – the dominant technology for PCs and TVs – has matured. LCD prices and margins have eroded steadily in the past few years, resulting in many suppliers cutting back capacity, according to Sweta Dash, Senior Director, Display Research and Strategy, IHS. This could lead to tightness in supply as existing inventory is burned off.

“For [OEMs], the market is uncertain; there will be a production shift; we will see tightness; and manufacturers will have to react to changes in the supply chain,” Dash said. “They will have to watch the market very carefully.”

Moving forward, Sharp’s strategy will depend on new technologies. Samsung has been at the cutting edge of ultra-thin organic light-emitting diode (OLED) screens while Sharp is strong in power-saving IGZO technology. The companies are mulling possible cooperation in technology development, although nothing is concrete, Sharp executives said.

Sharp’s strategy will also depend on financing. The Japanese company’s path back to profitability will requires it asking banks for $1.5 billion in funds.

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