It’s not over until two companies “shake hands.” Well, the beginning and end of that statement may not fit together so well, but the statement is true regardless: you can’t count an acquisition as complete until hands are shaken and everyone agrees. Such is the case with Sharp Corporation, a company known for supplying LCD screens to Apple. The company is looking to sell, and Foxconn was considered the winner. That seems to have changed, as Sharp has postponed the buyout to consider another option.
As you may have guessed, Samsung seems to be a possible buyer of Sharp now, with the Korean giant perhaps bidding over the top to take over Sharp and its LCD production. Samsung currently owns a 3% stake in Sharp thanks to its $93 million payment back in 2013, but the visit of Samsung Electronics vice chairman, Lee Jae-Yong, to Japan last week signals that something serious (a good serious) may be going on between the two companies.
While Samsung does own a stake in the company and uses AMOLED displays primarily for its high-end devices such as the Galaxy Note, Galaxy S, Galaxy A, and even Galaxy S Mini series (and now its own Tizen-powered Z series), Samsung also uses LCD panels for monitors, TVs, and tablets such as the TabPRO 10.1, TabPRO 12.2, and NotePRO 12.2.
Talks between Samsung and Sharp (and Sharp’s hesitance to shake hands with Foxconn right away) may have something to do with Samsung and its rival, Apple. Back in 2014, a report circulated that Sharp wanted to buy back the production equipment at its Mie Prefecture Kameyama Plant No.1 and would pay 30 billion yen ($293 million) to Apple to do so.
At the time, Sharp wanted to free itself from being completely reliant on Apple, who sways like the wind from one manufacturer to the next at its own whim (look at how Apple changes its mind about Samsung from one month to the next) and could take Sharp down the same path as it has done other suppliers. Apple, however, in the course of the argument, demanded “that the Japanese company not supply panels to Samsung” if the deal proceeded. Apple patent licensure agreements with Sharp, Nokia, Ericsson, and Philips were discovered by Samsung through an information leak, which put increased tension between Samsung and its American foe.
Now, with the stakes high for Sharp, who’s seen better days, Foxconn wants Sharp (to get away from its reliance on Apple); Sharp wants to better compete in the market, even if at the hands of another company – though Samsung has stolen business from Sharp a time or two; and Samsung, the one to whom Apple didn’t want Sharp supplying LCD panels, has high hopes of a Sharp acquisition. If all goes well for Samsung, Apple may very well be right back where it started: relying on Samsung.
And that is what economists have always meant by supply and demand.