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Date: 2012-03-27
Foxconn Buys Into Sharp---WSJ

TOKYO—Sharp Corp.'s 6753.TO -0.24%decision to seek a lifeline from Taiwan's Hon Hai Precision Industry Co. underscores how far Japan's once-dominant electronics industry has fallen.
The alliance also signals China's growing prominence as a hub for electronics manufacturing, led by the rapid ascendancy of Hon Hai, one of China's biggest exporters.
Hon Hai builds gadgets for some of the world's largest companies, including Apple Inc. AAPL -0.23%and even Japanese firms such as Sony Corp. 6758.TO +0.90%and Nintendo Co. But most of its business is running sprawling factories with tens of thousands of workers, rather than designing cutting-edge electronics or components.
On Tuesday Sharp said it sold a 10% stake to Hon Hai and its affiliate companies, collectively known as Foxconn, in exchange for about $800 million in cash to help shore up its core business of liquid-crystal display panels for televisions—an operation largely responsible for the multibillion-dollar losses Sharp expects to post this fiscal year.
"We have tried to do everything by ourselves, but the environment is tough," said Sharp executive managing officer Takashi Okuda—set to become president April 1—at a news conference in Tokyo. Sharp's shares have fallen 26% so far this year and investors have been concerned about how Sharp would raise capital.
Hon Hai in turn will become Sharp's largest shareholder and gain technical expertise and manufacturing technology to build LCD panels. The company is growing at breakneck speed, generating revenue of $117 billion last fiscal year that dwarfs Sharp's sales despite being more than 60 years younger.
Hon Hai's founder Terry Gou entered the industry in 1974 by producing plastic parts for black-and-white television sets and over the years has moved into more sophisticated businesses, including PC components. He has since built an empire with sprawling factories around China with roughly a million workers.
 
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