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Business Insight


Business Insight

The History and Future of Sharp

The founder of Sharp, Tokuji Hayakawa, launched the business in 1912. He started out making belt buckles in a factory in Tokyo. A few years later he revolutionized the mechanical pencil known in Japan as the "sharp pencil" -- a product that gave the company its name.

Hayakawa and his staff suffered big losses in the Great Kanto earthquake in 1923. They relocated to Osaka and started fresh, this time focusing on electrical goods.

They were the first in Japan to produce crystal radios, and in 1953, they started selling the first domestically-made color TVs. They also invented the world's first pocket calculator.

1988 was a turning point. Sharp's engineers created the first LCD panel. Executives saw the exciting new technology as the future of the company.

In 2004, Sharp started shipping LCD panels from its factory in Mie Prefecture. In 2009, it opened the world's biggest LCD plant in Osaka Prefecture.

The company pumped one trillion yen, or about $8.5 billion at the current rate, into the plants. The investment came to weigh heavily on its business.

Fierce competition with South Korean rivals started to take a toll. Then the global financial crisis hit.

"We'll do everything we can to reinvent Sharp based on our policies of honesty and ingenuity. We'll devote everything we have."
Kozo Takahashi / Sharp Executive Vice President

For the fiscal year ending in March 2013, executives reported a net loss of about $4.6 billion. It was the biggest in the firm's history.

At that point, Sharp shifted its focus to small LCD panels for smartphones. But demand dwindled as economic growth in China started to slow.

For the year ending March 2015, Sharp posted another net loss of $1.8 billion. The firm launched a major consolidation effort. It sold its headquarters in Osaka and offered early retirement to more than 3,200 workers.

The Innovation Network Corporation of Japan offered to invest in Sharp's display business. The government-backed fund entered talks with the industry ministry, which agreed to oversee the bid. Government officials are hoping to keep Sharp's advanced LCD technology in the country.

Taiwanese company Hon Hai Precision Industry also came forward with a rescue plan.

Until last week, Sharp was leaning toward the INCJ bid, worth roughly $2.5 billion.

But at the end of last month, Hon Hai Chairman and CEO Gou Tai-ming met with Sharp's board. He upped his firm's offer from about $5 billion dollars to nearly $6 billion. He outlined his proposal and promised to protect jobs.

Sharp is now giving priority to talks with Hon Hai. But it's leaving open the option of continuing talks with the INCJ. Officials say they'll make a final decision in about a month.

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