Sharp’s Collapse May Affect Apple TV Production, Analysts Say

Sharp shares plunged this past Friday after the Japanese electronics vendor announced massive quarterly losses, as well as plans to fire 5,000 of its staff. Foxconn, which owns 10 percent of the company’s display business, saw its shares take a plunge too. Analysts believe the situation could hurt Apple, Foxconn’s most prised customer.

On March 27, 2012, Foxconn signed an agreement with Sharp Corp. to grab a 10 percent stake in the company.

However, Sharp's share prices plunged dramatically on Friday, August 6, as the vendor announced losses of about 250 billion yen, which translates into $3.2 billion (around €2.58 Bn.), as well as a job cut plan.

The huge loss recorded by Sharp on Friday is actually bigger than the company’s market valuation.

Specifically, Sharp’s stock price plunged to JPY192 per share, the lowest in 30 years. As a result of this, Foxconn's share price also took a dive on Friday, according to Taiwanese trade publication DigiTimes.

However, Foxconn CEO Terry Gou officially said he still wants to invest in Sharp. He said he reached an agreement with Sharp to renegotiate the prices for purchasing a stake in the company, and plans to finish the deal (more like ordeal) by the end of March 31, 2013.

Foxconn Technology Group is regarded as a key factor to keep Sharp alive, in order to continue a stable supply of components for Apple Inc. in Cupertino, California.

Foxconn’s primary goal is to secure access to the latest technology for parts used by Apple, its biggest client, according to a report by Bloomberg citing Alberto Moel, an analyst at Sanford C. Bernstein in Hong Kong.

“Apple needs Sharp,” said Moel. “Sharp’s capacity is large enough that if it were taken offline, it could hurt Apple.”

The California-based computer company is expected to unveil a full-fledged television product in the coming months. The display employed by this product is said to be produced by Sharp.