A deal that would have made electronics giant Foxconn a major shareholder in Japan display maker Sharp has fallen apart, though the companies remain close partners in the complex global electronics supply chain.
Foxconn's Hon Hai Precision Industry announced in March 2012 it would invest about US$806 million in Sharp for newly issued shares. But negotiations dragged on as Sharp's stock price plunged in the following months, and the two failed to come to an agreement on the investment by their agreed to deadline of Tuesday.
As Sharp had not received payment from Foxconn by the deadline, the new share allotment will not be issued, Sharp said in a news release Tuesday.
However, "The two companies are still discussing about details" of other possible deals, said Sharp spokeswoman Miyuki Nakayama. She said Sharp is also looking at other means of obtaining investment, which includes the possibly of finding other investors.
The deal was seen as beneficial for both companies, with Foxconn gaining greater access to Sharp's LCD manufacturing capacity and advanced technologies, while Sharp received a much-needed cash infusion to boost its sagging finances. Both count Apple among their major clients and reports have said they are involved in the U.S. firm's long-rumored "iTV" product.
A Foxconn investment firm completed a separate investment last year of roughly US$700 million to take half control of one of Sharp's major factories that produces LCD displays for large screen TVs.
The two companies are now in vastly different circumstances. Earlier Tuesday, Foxconn posted a record annual profit, while Sharp is going through a major restructuring as it limps to the end of its fiscal year, for which it forecasts a deep loss.
Still, Sharp remains one of the world's largest manufactures of LCD screens, with advanced technologies that appeal to other firms. Its also remains a major seller of TVs under its own brand.
"Sharp's TV business, though on the decline, still commands significant volumes, which are mostly built by Sharp in-house," said Jeffrey Wu, an analyst with research firm IHS iSuppli.
Earlier this month, Sharp postponed a US$60 investment from Qualcomm as the two firms were unable to make sufficient progress on joint display research. An earlier US$60 million investment from Qualcomm was completed in December.
Sharp also secured a US$100 million investment from Samsung, agreeing to become a major supplier of screens for the South Korean's company.
This story, "Foxconn deal to become major shareholder in Sharp falls apart" was originally published by IDG News Service .