Sharp Invests In Pioneer To Jointly Develop Products

by Greg Tarr -- TWICE, 9/20/2007 11:59:00 AM

Tokyo — Sharp and Pioneer have agreed to form capital and business ties, with plans to join forces on the development of next-generation consumer electronics products.

Pioneer said it will issue 30 million new shares to Sharp for $357.3 million on Dec. 20. The private placement will make Sharp the top shareholder of Pioneer, with a 14.28 percent stake.

Sharp will sell 10 million, or 0.9 percent, of its outstanding shares from its treasury stock to Pioneer for $172.3 million that month.

“As you know, there is harsh global competition in the electronics business field,” said Mikio Katayama, Sharp president/COO, in remarks announcing the deal. “Technology has been developing significantly faster compared to the past. Regarding industry trends, it is not an exaggeration to say that we cannot predict one year ahead, or half a year, or even three months ahead. In this environment, if we tried to cover all the necessary technology by ourselves, it would take considerable amounts of time, human resources and expenses. This might cause us to miss big opportunities.

“So, in order to cover core technology and know-how that we do not have, we believe a strategic business alliance is needed,” he said.

The two companies said they will combine their expertise to jointly develop products in next-generation DVDs, audio, car electronics and displays.

In next-generation DVD products, Sharp currently produces blue-violet laser diodes for Blu-ray Disc players while Pioneer contributed drive module technology to the development of the optical disk format.

The companies also plan to jointly develop new network-related products for in home electronics applications.

In mobile electronics, which is a Pioneer strength, the companies look to create new business opportunities by combining Sharp’s technology in small- and medium-size displays, communication and sensor technology with Pioneer’s car navigation technology and other car electronics technologies.

In imaging applications, the two look to expand both companies’ display businesses and develop new A/V products based on future display technologies such as OEL displays.

Pioneer, which ranks ninth in the Japanese consumer electronics industry according to a Nikkei report, plans to procure LCD panels from Sharp to add televisions smaller than 42 inches to its lineup.

Pioneer, which has seen three consecutive years of losses, posting a net loss of $58.6 million in fiscal 2006, will use the $189 million net gain from the capital tie-up with Sharp to rebuild operations including the plasma TV business, which ranks third in the domestic market.

Sharp, the sixth-largest Japanese consumer electronics manufacturer according to Nikkei, will reduce its reliance on LCDs by developing products using Pioneer’s optical disc, car navigation and audio technologies. Sharp, the leading Japanese LCD TV maker, derives more than 70 percent of its group operating profit from LCD businesses.