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Sharp charts recovery with bold TV sales target www.asia.nikkei.com
OSAKA -- Sharp said Tuesday that it aims to sell 10 million liquid crystal display TVs worldwide in fiscal 2018, double the projected tally for fiscal 2016 -- a goal that hinges on striking a delicate balance with Hon Hai Precision Industry, which became its parent in August.
"We have gone through structural reform and belt-tightening measures," said Kazuhiro Kitamura, deputy head of Sharp's digital information appliance business, at a product briefing in Tokyo. "Now we are looking to sell more units to boost sales."
The struggling Japanese consumer electronics maker is banking on replacement demand in the domestic market. It will release a 45-inch 4K LCD TV at the end of the month, hoping to entice those who own old 32-inch models, the most popular size among the previous generation of LCD TVs, to switch over.
It is also looking to make inroads in emerging markets, such as Southeast Asia -- where consumers are throwing out their tube TVs for flat screens -- and Africa, which has great growth potential.
Back to glory
Sharp's TV sales have continued to fall since marking a record high of 14.82 million units in fiscal 2010. The figure came to 5.82 million in fiscal 2015 and is expected to decline further in fiscal 2016, which ends this coming March. The company's global share has fallen from 6.7% in 2010 to 2.8% in 2015, according to IHS Technology. While Sharp has topped the 10 million unit mark before, it is still an ambitious goal for a company that has since gone through multiple rounds of layoffs.
Taiwan-based Hon Hai -- which is also known as Foxconn and owns 66% of Sharp's shares -- holds the key to Sharp's revival. The Japanese company plans to start selling TVs developed jointly with Foxconn by the end of the year. It will also consider contracting the assembly of products for China and Southeast Asia at the Taiwanese parent's factories. The move could potentially slash costs, since the plants are closer to the intended markets and have a strong ability to procure parts.
Tai Jeng-wu, Foxconn's No. 2 man who became Sharp's president as part of the buyout, seems eager to revive Sharp's TV business. He has noted that Sharp aims to promptly begin the efforts to buy back the usage rights for its TV brand from licensees in the U.S. and Europe.
Working out kinks
But obstacles remain. Sharp currently sources most of its LCD panels from its own plant in Mie Prefecture and from Sakai Display Products, which it runs jointly with Foxconn. But it hinted Tuesday at possibly increasing its procurement of panels from Innolux, a Foxconn group Taiwanese company that supplies only a small amount of the product to Sharp now.
Sharp can produce enough LCDs domestically for 10 million TVs, sources say. Its plants, which also produce panels to sell outside the group, currently enjoy high utilization rates, but it is unclear how long that will last. Procuring more LCDs from Innolux could negatively impact on those plant's utilization rates down the road.
And Sharp may be forced to focus more on cheaper products to capture emerging markets. The TV business is on track to turn a profit this fiscal year. But the profit margin will shrink if products are priced too low in a bid to rack up sales volume, which would offset the cost-cutting benefits of cooperating with Foxconn.
"Selling twice the number of TVs won't necessarily mean sales will also double," Kitamura said.
Sharp was the first company in the world to offer 20-inch LCD TVs, which brought its Aquos line to the global stage. Foxconn's help is key to restoring its position in the industry, but Sharp will have to figure out how to work with the Taiwanese parent first.
Published Date:2016-09-21
