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Japan's Sharp to Get Cash Injection from Qualcomm

Dec. 4, 2012
Sharp has suffered a series of credit rating downgrades and warned it expects to lose about $5.6 billion in the fiscal year to March 2013.

TOKYO - Cash-strapped Japanese electronics giant Sharp (IW 1000/15) said Tuesday it had struck a capital injection deal with U.S.-based chipmaker Qualcomm (IW 500/77) as it moves to repair its tattered balance sheet.

The 9.9 billion yen ($121 million) investment follows earlier reports that Sharp, which is suffering heavy losses, has also been talking to other U.S. tech giants, including Intel (IW 500/26) and Dell (IW 500/20), about a possible investment.

The Qualcomm deal would see the pair jointly develop energy-efficient liquid crystal display (LCD) panels for smartphones using the Japanese firm's technology, with the U.S. company initially getting about 2.64% of Sharp's stock, based on 4.9 billion yen worth of shares.

The remainder of the investment would be paid as the joint venture progresses, Sharp said.

Sharp shares got a boost from earlier reports of the Qualcomm deal, with the embattled stock rising 1.16% to 174 yen in Tokyo on Tuesday.

"We positioned mid-sized and small LCD panels as our growth engine as we are competitive in that technology," Sharp said in a statement.

"The market for smartphones and tablets, the target for the mid-sized and small LCD panels, are expected to require higher picture quality and energy-efficiency as the market expands," it added.

Sharp has suffered a series of credit rating downgrades and warned it expects to lose about $5.6 billion in the fiscal year to March 2013.

The Osaka-based maker of Aquos brand electronics has announced thousands of job losses while cutting wages for employees -- from the factory floor to the executive boardroom -- and selling real-estate to shore up its balance sheet.

Earlier this year, Sharp said it had reached a capital injection deal worth about $800 million with Taiwan's Hon Hai Precision, which makes Apple (IW 500/9) gadgets in China, but the deal stalled as Sharp's share price nosedived.

Japan's battered electronics sector has suffered from a myriad of problems including a high yen, slowing demand in key export markets, fierce overseas competition and strategic mistakes that left its finances in ruins.

Copyright Agence France-Presse, 2012

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