PConline talks about a once-in-Japan industrial giant. One is the world's largest 3C foundry. After four years, it finally came to formally. Foxconn’s parent company, Hon Hai Hao’s feat of throwing 700 billion yen (approximately RMB 40.4 billion) to win Sharp, will become a transaction engraved on the cultural relics. The local tycoon married a “Japanese wifeâ€, and the road to marriage was unusually ups and downs. Why did Japan’s home appliance giant fall? Why did you step in the footsteps of Nintendo, Sanyo, and Elpida? And why is Hon Hai so attached to Sharp as a troubled "Japanese wife"? All this is intriguing.
Since 2015, Sharp, just out of the woods, has relapsed into a quagmire of huge losses and has been unable to accept the bank’s huge sums of money in order to save himself, but he is still unable to return to heaven. As a result, the peeling of the LCD panel was put on the agenda. People are still sighing. How can a generation of giants come to such a situation? With the precedent of Japanese companies such as Sanyo, Panasonic, and Toshiba, Sharp's experience is no longer embarrassing. It seems that people have become accustomed to this sigh.
For Sharp's acquisition, the focus of attention is more focused on Hon Hai. Regardless of his personal sentiment regarding Sharp, Hon Hai’s insistence on spending 700 billion yen to win Sharp from the Japanese government’s industrial innovation agency supported by the Japanese government will inevitably have a deeper meaning. Four years ago, Hon Hai began to seek Sharp's cooperation. At the same time, Foxconn is Apple's foundry, Sharp is Apple's mobile phone provides the main component - the screen, which may have a certain interest relationship.
In addition, from the display panel industry represented by Sharp itself, the situation of confrontation between Japan and South Korea may change, and it will become a four-way pattern of Samsung and LG in Korea, Hon Hai in Taiwan, and JDI in Japan. The sea may be more concerned about, starting from a pure foundry, involved in the core technology industry that can make big money.
However, for consumers, what should be more concerned about is Sharp's taste after the acquisition? Or will Sharp become history? We hope to see Hon Hai continue to maintain or even grow Sharp's brand value and regain its former glory. But what are the risks of Hon Hai? With this kind of question, let us be more interested in understanding the details of the entire incident.
Sharp's huge loss of ability to marry abroad is also a helpless move
On the morning of February 25, 2016, Sharp’s temporary board of directors Sharp finally decided to accept Foxconn’s acquisition agreement of 700 billion yen (about 40.8 billion yuan), which will be subsumed under the control of Foxconn Taiwan’s parent company Foxconn. Sharp's "Japanese wife" was also officially married to Foxconn, which became the first case of Japanese motor makers being acquired by foreign companies. Once the home appliance giant is now "committed to marry", everyone does not know is so helpless?
Since Sanyo, Toshiba and other brands, Sharp, the father of LCD, has been struggling with losses in recent years. After experiencing losses for two consecutive financial years, Sharp successfully turned losses in the 2013 financial year. However, it subsequently relapsed into a loss. The company’s net profit for the fiscal year 2014 was a loss of 222.3 billion yen (approximately RMB 11.5 billion). Sharp received capital assistance of Mizuho Bank and Mitsubishi Tokyo UFJ Bank of 200 billion yen in 2015 for full reconstruction. However, the reconstruction results are not satisfactory. The latest figures released on February 4, 2016 show that Sharp had a net loss of 108.3 billion yen (approximately RMB 6 billion) for the first three quarters of 2015 (April to December 2015). ). It is expected that there will be a huge final loss in FY2015 (as of March 2016).
In fact, since March 31, 2008 fiscal year, Sharp has had his first annual earnings deficit since the 1956 listing on the Tokyo Stock Exchange, and he has started to fall on the decline road. Like its Japanese partners Sanyo and Toshiba, Sharp tried to save itself by various means, closing some factories, laying off staff, and splitting the loss-making business. By 2015, Sharp's plan to sell its LCD panel business "buy it for itself" was buzzing. We must know that the LCD panel business is one of Sharp's core businesses and it is the world's biggest weapon.
Summary: It is not a matter of compulsion, but it is already at the very moment of survival. Sharp, who tried various methods of self-rescue and was still powerless, finally chose to seek a backing to improve the current situation. At least he was able to protect himself, not to mention the "marrying" of local tycoons such as Foxconn.
Foxconn Sharp Marriage: A Wave of N Discounts
This "marriage" is finally settled, and I can rest assured. From the end of 2015 to the present, I have been concerned about Foxconn's acquisition of Sharp. During the period of various rumors, it was comparable to an urban sentiment drama, with a wave of N folds. Foxconn's bitter love for Sharp finally came to fruition today. In fact, Foxconn loves Sharp as early as four years ago.
As early as March 2012, Hon Hai had signed a cooperation contract with Sharp. The two sides had differences on the acquisition of Sharp's stock price determination and on whether Hon Hai was involved in the major issues. The cooperation between Hon Hai and Sharp has progressed very slowly. In fact, it is mainly because Sharp hopes Hon Hai to “purely invest†and Hon Hai hopes to operate “the right to participate.†Both parties have insisted on leading to the failure of the first cooperation. In July of the same year, Gou worked with Sharp on his own behalf. He suffered a loss in the company's 10th generation factory in Da Lat, Japan. In a short period of one year, SDP reversed huge losses in consecutive years, turning losses from 2013 to profitability. . It can be said that this incident made Sharp see that Hon Hai has the ability to further improve Sharp's current operating and financial difficulties.
This time, after Sharp regained his losses, he took the initiative to find his back and struggled for three years. Finally he saw the hope that Hon Hai would not miss this opportunity. At first, Sharp announced that it would peel off the LCD panel business. Hon Hai did not hesitate to accept it, and the acquisition plan of RMB 300 billion was soon released. At this time, the most powerful obstacle appeared - the Japanese government-sponsored Japanese industrial innovation agency. In order to prevent the outflow of Sharp's core technology, the Japanese industrial innovation agency hopes to integrate Sharp and JDI. With the support of the Japanese government, it is widely believed that Hon Hai’s opportunities are paralyzed. After all, Sharp’s LCD technology has played a pivotal role in the Japanese display panel industry.
Foxconn is still reluctant to stop here. So Terry Gou went to Japan to seek more opportunities. This time, Foxconn has more than doubled its price tag. Nearly 700 billion Japanese Yen has already been more than twice as high as its rival's Japanese industrial innovation agency. Perhaps the sincerity of Gou's sincerity or the acquisition plan of Hon Hai's sky-high price, things began to take a turn for the better, and Hon Hai and the Japanese industrial innovation agency became Sharp's final choice. Since then, it has been reported that Sharp executives also went to Taiwan and Hon Hai to discuss the acquisition plan. At this time, the balance has begun to tilt...
The days of waiting for the results are the most anxious. Foxconn has fully demonstrated to the world the nature of its local tyrants. In order to win Sharp, the “Japanese wife†has been at all costs, and this also shows Sharp’s future for Hon Hai. The importance of development. After a wave of waves started, it was time to see the result come out. At this time, Samsung came in again. Vice President of Samsung Electronics Co., Ltd. Li Zaiyu went to Japan and said that Samsung Electronics is willing to support Sharp. In December last year, Samsung Electronics stated that it was interested in the LCD panel factory in Sakai, Japan. The factory is jointly owned by Sharp and Hon Hai, each with a 38% stake, and Samsung hopes to receive 38% of Sharp's holdings. . Also, Samsung Sharp is, after all, a representative of the opposing factions. How can this situation be less Samsung?
Summary: Fortunately, Samsung's sudden "visit" did not affect the results, Foxconn also successfully held the beauty return, this way a wave of N fold, the author said that looking tired, it seems that business on the field, or local tyrants Most understand, there is a simple and crude way - save money.
700 billion yen! After Foxconn saw Sharpe?
A willing to sell, you also need a willing to buy. Although Sharp firmly grasps the core technology that it is proud of, it has turned into a mess after it has spent huge sums of money to save itself and recover from the catastrophic losses. However, Foxconn does not hesitate to spend 700 billion yen to purchase a lot of money. Is buying! What did Foxconn see Sharp in the end?
1. Hon Hai is in a hurry to transform
Apple is the largest customer of Hon Hai, but Hon Hai is only 2% to 5% of its profits. However, in recent years, Foxconn’s over-reliance on Apple’s ills has gradually become apparent. In January, Foxconn’s recent financial report showed that the comprehensive income for the month was NT$337.605 billion (approximately US$10.08 billion), a 17.59% decrease from the previous quarter. The reason behind this is that the iPhone 6s series has slowed sales. This passive situation has also further affected Hon Hai’s worries about the entire group and it is time to start the transition.
Foxconn has been seeking to expand beyond the low-margin foundry business to enter high-end component production. Sharp's display panel technology will help Foxconn enter the screen production business and reduce its dependence on OEM business. Shigeo Hiroshi, a professor of industrial economics at the Graduate School of the University of Tokyo in Japan, said that he believes that Hon Hai recognizes that its current business model will cause it to face growth bottlenecks sooner or later. Sharp's technology will help it expand its business and strengthen its development of high-end products. Ability.
2. Take More Apple Orders
A large part of Foxconn’s income comes from Apple. Although Foxconn has tried its best to reduce its dependence on Apple, Foxconn is trying its best to obtain more orders from Apple. At present, 87% of the world's LTPS panel production capacity is held by Sharp, Japan Display Corporation (JDI) and South Korea's LG, of which more than 50% of LTPS production capacity is mainly supplied to Apple. Sharp is an important supplier of display panels for Apple's mobile phones, and the merger of the two will give Hon Hai a stronger bargaining power.
There are also rumors that the next generation of iPhone may use OLED screens, which is even more encouraging for Foxconn to win Sharp, after all, as the most important part of mobile phones, the profits generated by the screen may be more than the average parts foundry. many.
3. Against Samsung, LG
At present, display technology has always been the status of Japan and South Korea confrontation. In recent years, the Korean brands Samsung and LG have been developing faster and faster, and the Japanese side is only struggling with Sharp and JDI. Sharp's hands still hold the core patents of most of the production panels. With these capitals, Hon Hai can also use Sharp's strength to have the capital against Samsung and LG.
In addition, OLED, as the most ideal screen form at this stage, is recognized as the best choice for replacing LCD panels in the future. Currently, Samsung is the main supplier of OLED screens. After acquiring Sharp, Foxconn may invest in the next generation of screen technology and become a key supplier.
Summary: Using Foxconn CEO Gou Tingming's words: “Panels are strategic materials, and the panel is also an important basis for the transformation and layout of the Hon Hai Group.†At the same time, Hon Hai is the largest color TV OEM in Taiwan, and the number of panel purchases is huge. From this point of view, Sharp It is also a suitable target for acquisition.
After the marriage of Foxconn Sharp, maybe...
LCD panel layout who is the only big?
It can be said that Hon Hai is growing out of the way. At the beginning of the 20th century, it was squeezed out by South Korean LCD panel makers, so it was ambitious to establish Innolux, acquire Chi Mei Electronics, and annex Tongbao Optoelectronics. In recent years, it has been crowded out by mainland panel makers, and Sharp, who spends so much money today, can be really stingy.
Since this matter has been reached, what changes will take place in the global LCD panel landscape? Sharp left. Japan still has JDI under the investment of industry innovation agencies. Now it is still the king of the small-size panel industry, and it is not inferior to Sharp in technology and technology. The mainland's BOE has also been ambitious to expand, in the acquisition of the South Korea's Hyundai HYDIS LCD panel industry in 2003, last year also set off a wave of the world's first 10.5 generation line storm, while also actively investing in OLED transformation strategy, has been Ordos launched the 5.5th generation line of Low Temperature Polysilicon (LTPS) and AMOLED. Another ferocious Chinese manufacturer, China Star Optoelectronics, is also developing rapidly. The days of Korean panel makers seem to have been very good in recent years, LGD is accelerating the development of large-size flexible OLED panels, the current momentum is also the dominance of OLED. After Samsung’s financial crisis in 2008, Samsung used its unique AMOLED technology to help its mobile phone business breakthrough and in turn enhance its investment in the LCD panel industry. What’s even more frightening is that Samsung’s efforts in LCD and OLED are both hands-on and face-to-face. Still moving capital into the OLED production line.
Come back to think about the world's largest 3C foundry Hon Hai Group, long wanted to stand up, and who is willing to live for other people to earn some hard money? Its Innolux has already started the research and development of OLED panels. And now Sharp's mouth fat is finally in his mouth. Looking at the panel layout of Japan, South Korea, the mainland, and Taiwan, it is interesting to note.
In a short period of time, the small-size area will still be dominated by JDI and Samsung. At the same time, Hon Hai owns the IGZO cake, and the bargaining power naturally soars. As for the problem of using Apple's screen without Hon Hai, the result is very obvious. Hon Hai can rapidly expand the production scale and reduce costs of IGZO products with its financial resources. It may also rely on the good relations established by Apple over the years to erode the JDI market. In the large-size field, Hon Hai has the ability to compete with LGD. Together with its own huge customer base, Hon Hai still has a certain degree of control over the Chinese mainland market. It should be noted that China is now the world's largest TV producer, with production accounting for 60% of the world's total, while China has produced nearly 80% of the world's mobile phones.
In addition Sharp chip and sensor and other components industry is also a more profitable business, is also what Hon Hai urgently wants to have. It may also be possible to pull orders for Apple CMOS sensors. Of course, Hon Hai can't do anything and eat Sharp. It only guarantees his power in global panel production and related product production.
After the acquisition, is Sharp's original taste?
This question involves Hon Hai's change in the way Sharp operates. If you maintain the original management and maintain the original profitable product line, then Sharp may also be the original taste of Sharp. However, in order to return the funds to return to profitability faster, Hon Hai should adopt a relatively large reform effort. Sharp management is likely to intervene in Hon Hai's personnel.
What Hon Hai wants to have is Sharp's high-margin high-end component productivity. We are familiar with the Sharp panel is Hon Hai most want to embrace, other home appliances including solar business Sharp is also limited to Japan, which can also be guessed that Sharp will face a round of business cuts and large layoffs, which is Japanese companies Common problems.
Of course, the fall of the giants will inevitably produce some influence beyond the inherent impression of people. For example, people always miss the Nokia before the Microsoft acquisition, the IBM and Motorola that were acquired by Lenovo. But precisely because they all have very strong technologies or designs, some traditions will continue. However, if the promotion is good or not, it will depend on the new owner giving no power.
What kind of risk is Hon Hai?
Of course, there are risks. Hon Hai is bound to break Sharp's transformation. For such a debt-ridden company that has suffered losses year after year, it is really a big bet to spend such a large price. But if you want to get high profits, you have to gamble because Foxconn, which only depends on OEMs, only has a poor 3% profit.
The latest news also shows that Sharp still has a "contingent debt" of about 20 billion yuan. This financial risk will also bring a lot of pressure to Hon Hai. Looking at Sharp's proud history in technological advancement and unsurpassed technology patents, Hon Hai can't bite the bullet and win it. Because of this, Hon Hai was able to display greater fists and achieve a grand "11-screen" strategy.
Summary: A giant's curtain call, the end of an era, always feels so sorry. Compared to Apple and Samsung's high praise for the triumph, Sharp also lacks a little forward-looking. The gears of capital and technology are so merciless. No matter how brilliant you are in the past, as long as you have not kept up with the frequency of the market and miscalculated your living environment, your ambitions and vision will become even more painful.
We also blessed Hon Hai and finally returned to the beautiful world. From then on, Hon Hai can also play a genuine and cost-effective battle. It is not only cheap labor, but also core competitiveness. It may really be able to quickly expand the panel market. . At the same time, we hope that Hon Hai will not abolish Sharp's personality, and don't let a generation of heroes be mediocre in your hands.
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