Shares in embattled Sharp soared Wednesday after reports that South
Korean rival Samsung would become its biggest foreign shareholder,
highlighting the fading fortunes of Japan's electronics giants.
Sharp's stock jumped 17.06 percent to 350 yen in opening Tokyo trade before easing to 339 yen by the morning break.
huge move was stoked by reports in Japan's leading Nikkei business
daily and other media that Samsung was set to invest in Sharp to boost
its access to screens used in its popular smartphones and tablet
computers a sector where Sharp's technology is a world leader.
would sell Samsung new shares worth about 10 billion yen ($108
million), giving it a three-percent stake in Sharp and making it the
Japanese firm's biggest overseas shareholder, the reports said.
meanwhile, would use the funds to help shore up its bleeding bottom
line, media reported, with an official announcement expected later
The maker of Aquos-brand electronics declined comment on the reports.
decision by Sharp to accept a capital injection from a foreign firm
historically a rare move for a Japanese company would mark a major
comedown for both the company and Japan's manufacturers, said Hiroshi
Sakai, chief economist with SMBC Friend Research Centre.
Japan, it is symbolic and shocking news as Sharp, which used to be a
frontrunner in the panel industry, is struggling while its rival Samsung
has raced past it," he said, adding that the deal "should not be any
surprise" given Samsung's leading position in the global electronics
The deal would not solve all of Sharp's woes, he added, as
the struggling firm cuts jobs and overhauls its business after saying
in February that its loss in the nine months to December had doubled to
about $4.6 billion.
Rival Sony, meanwhile, is selling off its
headquarters in Manhattan and a major building in Tokyo to raise cash,
while money-losing Panasonic is undergoing a similar painful
Given the sector's struggles, deals between Japanese and foreign rivals are likely to increase, Sakai said.
other Japanese electronics makers are struggling to survive. But they
still have attractive technologies and some foreign rivals are quite
interested in them," he said.
Japan's electronics giants have
suffered myriad problems including a strong yen, weak demand in key
export markets, fierce competition especially in their struggling TV
divisions and strategic mistakes that left their finances in ruins.
which last year warned over its own survival and put up its Osaka
headquarters as collateral to clinch crucial bank loans has been
hammered by lower-cost rivals in its liquid-crystal display business.
reported Samsung-Sharp deal gives the South Korean company more access
to the market without investing in new production plants, analysts said.
cheered the reported deal on expectations it would usher in higher
output at Sharp's flat-panel manufacturing plants, said Toshiyuki
Kanayama, senior market analyst at Monex Inc.
expecting that Samsung's significant sales force would contribute to
Sharp plants' operation rates, as demand from Apple is declining," he
Sharp expects to close its fiscal year to March with a net
loss of 450 billion yen, but has backed off earlier warnings over its
ability to survive.
Last month, reports said an expected capital
injection from Taiwan's Hon Hai Precision, which makes Apple gadgets in
China, had been shelved.