Sharp Gets Customers for IGZO Display Panels, Executive Says

Sharp Corp. (6753), Japan’s largest maker of liquid-crystal displays, has lined up customers for its most advanced panels after saying earlier this year it was struggling to find buyers.

Other electronics makers will probably begin selling mobile products featuring the company’s IGZO displays starting in the first three months of 2013, a senior Sharp executive said yesterday at a briefing in Osaka, given on condition of anonymity. The executive declined to name customers or say whether the products are smartphones or tablets.

“A domestic company will probably offer products using IGZO display panels from the first quarter of the calendar year,” the executive said. “As for foreign brands, you will probably see such products in the second quarter.”

Finding buyers for the IGZO panels is critical to Sharp as the company tries to end losses at its display business. The Osaka-based manufacturer on Nov. 1 forecast a record net loss of 450 billion yen ($5.5 billion) for the year ending March 31 amid falling prices and demand, a strong yen and competition from Samsung Electronics Co. (005930)

Sharp shares rose 4.3 percent to 171 yen at the 3 p.m. close in Tokyo, trimming their year-to-date decline to 75 percent. The stock is the worst performer among more than 1,600 companies in the MSCI World Index of developed nations.

‘Imminent Risk’

A Sharp executive said in September the company was struggling to find customers for the panels, which use a new oxide semiconductor that consists of indium, gallium and zinc. The displays offer higher resolution and use less power than current LCD panels, according to Sharp.

The company began making computer panels using the technology at its Kameyama No. 2 plant in central Japan in March. It started making small IGZO displays for smartphones at its plant in Tenri, near Osaka, in October.

Sharp didn’t make any revenue selling IGZO displays made at that Kameyama plant last quarter, Masahiro Ono, a Tokyo-based analyst at Morgan Stanley MUFG Securities Co., said in a report Nov. 2. That’s down from 9 billion yen the previous quarter, according to the report. The medium-sized IGZO operation will generate 18 billion yen in sales in each of the following two quarters, the report said.

“The low operation rate of the Kameyama No. 2 plant has been an issue for the company,” said Hideki Yasuda, an analyst at Ace Securities Co. in Tokyo. “It’s positive that demand for Sharp’s IGZO panels is rising. It gives me the impression that imminent risk may be fading away.”

Aquos Smartphone

Sharp will start offering the Aquos smartphone using 4.9- inch IGZO displays and the Aquos Pad using a 7-inch IGZO panel in Japan by year’s end, the company said Oct. 23. The company is in talks with Dell Inc. and Hewlett-Packard Co. to supply IGZO displays for the makers of personal computers, the Yomiuri newspaper said Oct. 20.

Sharp is continuing discussions with Taiwan’s Foxconn Technology Group on possible cooperation to promote sales of IGZO panels, the Sharp executive said. The two companies looked into using the technology in business-use monitors and decided against it, the executive said.

“The monitors don’t really require IGZO specifications,” the executive said.

Sony, Panasonic

Sony Corp., Panasonic Corp. and Sharp have resorted to closing factories, eliminating jobs and cutting costs to revive profit as TV demand declines and after failing to come up with hit products to challenge Samsung and Apple Inc. (AAPL) There was “material doubt” about Sharp’s ability to survive, the company said in a financial statement Nov. 1.

In March, Sharp signed an agreement to sell a 9.9 percent stake through new shares to Taipei-based Foxconn at 550 yen apiece, for a total investment of 67 billion yen. The Osaka- based company hasn’t been able to close the deal after an earnings forecast revision in August caused its shares to plunge, prompting a renegotiation.

Sharp assumes a deal can be reached, President Takashi Okuda said Nov. 1.

In July, Sharp sold a stake in an LCD factory in central Japan to Foxconn’s billionaire founder Terry Gou, who will jointly run the 10th-generation facility, the most advanced in the industry.

Fitch Ratings cited Sharp’s growing liquidity risks in cutting the company’s credit rating Nov. 2 by six levels to B-, a junk rating defined as “highly speculative.”

Sharp sought banks’ support to help refinance its commercial papers after its credit rating was cut, and the company secured 360 billion yen in loans in September.

The company will book a 25.3 billion yen one-time charge in the quarter ending Dec. 31 to eliminate 2,960 jobs, Sharp said Nov. 20. Its turnaround plan includes seeking voluntary retirements, cutting salaries, selling assets and reducing capital investments, Sharp said Nov. 1.

To contact the reporter on this story: Mariko Yasu in Tokyo at myasu@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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