With Sharp Deal, Samsung Steals a March on Apple

With Sharp Deal, Samsung Steals a March on Apple
Samsung's SUR40 touch display is on view at the 2013 CeBIT technology trade fair in Hanover, Germany
Photograph by Sean Gallup/Getty Images

Samsung announced today that it had bought a 3 percent stake in display maker Sharp for ¥10.4 billion  ($111 million). As Bloomberg News points out, the deal offers a slender lifeline for Sharp, which has forecast a record loss of ¥450 billion for this year. The company has been desperately trying to raise funds to stave off collapse, selling shares to Qualcomm, the U.S. semiconductor company, and trying—but ultimately failing—to sell a stake to China’s Foxconn.

The roots of Sharp’s frenzied deal-making are straightforward enough—the company failed to foresee and prepare for the slowdown in demand for TVs. But the symbolic and financial ramifications are broader. Sharp is a Japanese tech company, an iconic one at that. In desperation it has had to go, hat in hand, first to a Chinese manufacturer and now, in Samsung, to a Korean one. Few things could more sharply illustrate where Japan now stands in relation to two neighbors it once dominated economically—and, for the first half to the 20th century, militarily.

Then there’s Apple: Samsung’s target and competitor in the smartphone and tablet wars. Apple is Sharp’s biggest customer: the latter makes the displays for iPhones and iPads. Sharp also supplies displays for Samsung devices. Samsung says it is not going to be involved in management issues, but it’s not hard to imagine the Korean company getting priority in displays over Apple’s needs. One of the key advantages Apple has always had lay its vice-like control over suppliers. This deal loosens that.

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