TOKYOâ€"Qualcomm will invest $120 million in Sharp, throwing a fresh lifeline to the struggling Japanese electronics giant after it issued a dire warning last month over its ability to keep operating.
In a statement, Sharp, the maker of Aquos televisions, said it would issue ¥4.9 billion, or about $59.7 million, worth of new shares to Qualcomm at ¥164 a share, a slight discount to the company's closing share price on Tuesday. Sharp said it had secured a second investment from the San Diego-based Qualcomm of up to ¥5 billion.
The initial investment is likely to make Qualcomm Sharp's biggest shareholder, with a 2.65 percent stake, Reuters said. According to the statement, the two manufacturers will develop liquid-crystal displays based on a new technology that Sharp has touted called IGZO, which the company says is more energy efficient, offers a crisper resolution and allows for more sensitive touch screens.
The Osaka-based Sharp has been hit by heavy losses in its flat-panel display business, which has been pummeled by intense competition from the likes of South Korea's Samsung Electronics. Dubbed the ‘‘Sharp Shock'' in Japan, the company's woes have underscored a wider decline of Japanese consumer electronics giants in the face of a painfully strong yen, a plunge in prices from cutthroat global competition and a dearth of breakthrough ideas.
Sharp announced this year that it planned to accept a ¥67 billion investment from Taiwan's Foxconn Technology, but a deal has become less certain as its financial woes deepened and share price plummeted.
Sharp, also a supplier of screens for Apple products, has been forced to cut jobs for the first time in six decades and put up its corporate headquarters as collateral to secure a ¥360 billion bank bailout in September.
Despite the bailout, Sharp said last month that there was ‘‘material doubt'' over its ability to survive after forecasting a record ¥450 billion loss for the year through March, though it vowed to take steps against such an outcome. Sharp's president, Takashi Okuda, said at the time the company was exploring partnerships.
Since then, news reports had linked Sharp as in talks with technology companies including Dell, Intel, Hewlett-Packard, Microsoft, Google and Apple. Sharp denied those reports, saying nothing had been decided.
In Tokyo, Sharp shares gained 1.2 percent to ¥174, after the Nikkei business daily reported details of the deal. Shares in sharp have lost three-quarters of their value this year.
