Foxconn’s Takeover of Sharp May Have Future iPhone Implications

The actual reasons why Apple supplier Foxconn acquired a majority stake in the struggling Japanese display manufacturer Sharp for roughly $3.5 billion may not be known, but analysts have thought of at least two: (1) future iPhone displays and (2) OLED display manufacturing market share (via the WSJ, Korea Economic Daily).

Iphone 6 display

As reported yesterday by the Wall Street Journal, Sharp has accepted Foxconn’s slimmed-down takeover offer. You may recall that the company also said yesterday it would invest in expanding Sharp’s screen production capacity, alongside new technologies, such as OLED, which Apple is expected to switch to with future iPhones.

The recent acquisition deal represents a threat to Korean display manufacturers, according to Eugene Investment analyst Lee Jeong, as Foxconn has emerged as a strong rival to LG Display and Samsung Display.

Apple currently uses LCD display technology in its products, with components supplied by Japan Display, LG Display, and Samsung Display. Should the switch to OLED materialize, Apple has fewer suppliers to choose from, as Samsung currently controls 95% of the OLED display market, according to data from market research firm Sigma Intell. Considering Apple’s savvy supply chain management, it wouldn’t want to rely on a single display manufacturer, especially not its biggest rival in the smartphone market, the analysts say.

That’s about to change with the Foxconn–Sharp deal. Samsung and LG Display may see this negatively affecting their OLED display orders, but for Foxconn, this represents a major opportunity as it targets a lucrative component business.

Technology enthusiast, rocker, biker and writer of iPhoneinCanada.ca. Follow me on Twitter or contact me via email: istvan@iphoneincanada.ca