Roger Fingas
One of Apple's key display suppliers, Sharp, posted an annual net loss of $1.9 billion on Thursday and cast doubt on its ability to keep operating, although it will continue to live on in the short-term thanks to investments by banks.
Sharp blamed the loss on competition from cheaper Chinese smartphone LCD panels, as well as past restructuring charges, according to the Financial Times. The company has in fact announced a new set of restructuring efforts, including laying off 10 percent of its workers, among them 3,500 people in Japan. It will also be selling off its head office in western Japan.
Mizuho and Bank of Tokyo-Mitsubishi UFJ have agreed to give Sharp 200 billion yen (approximately $1.7 billion) in a debt-for-equity swap, and the company will get an additional 25 billion yen ($209.9 million) from a fund backed by the banks. In its next fiscal year, the company is hoping to post an operating profit of 80 billion yen ($671.8 million). It could return to a net profit in fiscal 2017.
While Apple also sources displays from LG and Samsung, Sharp is a major partner, and is credited with being the first company to build LCD panels using IGZO (indium gallium zinc oxide) technology back in 2012. Apple may be preparing to switch to IGZO for its upcoming 12.9-inch iPad, though panels would allegedly be produced by LG and Samsung as well.
IGZO could potentially improve the response, thinness, and power consumption of Apple displays. At the moment the company relies on LTPS (low-temperature polycrystaline silicon) panels for iPhones and iPads.
Charles Martin
Malcolm Owen
William Gallagher
Christine McKee
Wesley Hilliard
40 Comments
No, I doubt Apple will purchase them.
It is certainly brutal out there for so many of these once great electronics firms. I have to admit, it is amazing how many gadgets I once bought that are now obsoleted by one or more of my Apple devices.
It is a dog eat dog world. The display manufacturing market has collapsed because everyone raced to the bottom along with brutal competition and commoditization. This was first evident in televisions. No one was making money on televisions. Even Samsung got out of that business by divesting that part of its business. Now it is hitting the small display business. Sharp's displays are too expensive for the market. They have to lower their prices to match the less expensive competition which makes identical displays. Otherwise they die. That is the nature of business.
[quote name="Roake" url="/t/186262/apple-display-supplier-sharp-posts-1-9-billion-annual-loss-avoids-collapse#post_2723329"]No, I doubt Apple will purchase them.[/quote] I'd doubt that too. I may be remembering incorrectly but didn't Apple prop them up somehow a few years back? Or was that just by advancing payment on a large order? Whatever, I would think ( actually 'firmly believe' would be more accurate to say) Tim is well aware of all his suppliers' financial situations and will have long had all the contingencies in place.
Operating profit of .6 billion next year, net profit in 2017—sounds like maybe they have IGZO production problems behind them. We're still missing IGZO Cinema Displays and retina MacBook Airs, if they continue that line. And Apple TV panels, of course, to keep Gene Munster from losing it, though it may be Foxconn that comes up with some or all of that production. Just trying to look at the bright side here. Sharp has something valuable enough to attract this interim financing.