Taipei, May 4 (CNA) The team-up between Taiwan-based Hon Hai Group and Japan's Sharp Corp. is expected to help Taiwanese flat panel maker Chimei Innolux Corp. , one of Hon Hai's units, obtain technology transfers from the Japanese electronics giant for a production upgrade, according to a report.
The report released by advisory firm DisplaySearch earlier this week said Hon Hai will be involved in Sharp's flat panel operations through a deal to acquire a stake in the Japanese company, and such a relationship is expected to secure flat screen technology for Hon Hai's subsidiary Chimei Innolux.
In late March, Hon Hai, the world's largest contract electronics maker, announced its acquisition of a roughly 11 percent stake in Sharp for US$800 million (NT$23.4 billion), which made it the Japanese firm's largest shareholder.
Under the deal, Hon Hai has also agreed to acquire a 46.5 percent stake in a 10th generation LCD plant in Sakai, western Japan, for an additional US$800 million.
DisplaySearch said the acquisition is expected to allow Hon Hai to not only own half of the Sharp plant's production but also to participate in the Japanese firm's future technology development, which will help Chimei Innolux upgrade its technology.
Before the deal, Hon Hai and Chimei Innolux had set up a partnership with Sharp, the advisory firm said.
Under the partership, Hon Hai was serving as a contract maker for the Japanese partner, while through technology licensing, Sharp had transferred ultraviolet included multi-domain vertical photo alignment technology for LCD screen production to Chimei Innolux.
In addition, Sharp had also provided technology assistance to Chimei Innolux to improve photo alignment process at the Taiwanese firm's 7.5th and 8.5th generation plants, DisplaySearch said.
Sharp has started placing orders with Hon Hai for LCD TV assembly, while Chimei Innolux has also begun supplying Sharp with certain TV flat panels that the Japanese firm does not make, according to DisplaySearch.
It is expected that Hon Hai will expand its TV assembly services for Sharp in light of the acquisition deal, the advisory firm said.
The Taiwanese group is planning to churn out 9.5 million LCD TVs this year, 1.5 million of which will be for Sharp and the remaining 8 million units for Sony, the firm added.
For Sharp, the deal with Hon Hai is expected to lead to huge injections of funds into the struggling Japanese firm to resolve its financial problems, the firm said.
(By Pan Chi-i and Frances Huang)