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Last updated: March 19, 2013 2:54 am
Sharp is to receive the second tranche of a Y9.9bn ($104m) investment from Qualcomm three months later than expected after failing to meet certain conditions of the capital tie-up with the US semiconductor group.
The struggling Japanese consumer electronics group said on Monday that about Y5bn it was to receive from Qualcomm on March 29 will be delayed until June because Sharp is not ready to mass produce the energy-saving next generation display panels the two groups are developing.
Qualcomm and Sharp, which is under pressure to raise funds and shore up its balance sheet, agreed a capital tie-up in December. Under the deal, the Japanese group would issue Y9.9bn worth of new shares to Qualcomm and jointly develop Micro Electro Mechanical System displays with Pixtronics, a subsidiary of Qualcomm.
The first payment of about Y4.9bn was made on December 27 but the second allotment is conditional on Sharp completing preparations for mass-producing the displays and achieving certain financial targets. These include making an operating profit for the second half of the year ending March 2013, and having at least Y100bn in net assets and a minimum of Y125bn in net cash.
“We need more time to be in a position to mass produce MEMS displays,” a Sharp representative said. “Nobody has been able to mass produce MEMS displays, so if we succeed it will be the first time in the world.”
MEMS displays for mobile equipment such as cell phones have the advantages of sharper images and lower power consumption than current technology.
Sharp, which has suffered a decline in sales of its televisions and display panels, has forecast a second year of losses after posting a Y376bn net loss in the year to March 31 2012. For the current year it projects a net loss of Y450bn.
To raise funds, Sharp is looking to sell assets such as its Mexican and Chinese TV assembly plants, and has formed capital alliances with Qualcomm and Samsung Electronics.
Earlier this month, Samsung agreed to invest Y10bn in Sharp in exchange for a 3 per cent stake, the first-ever capital tie-up between major electronics groups from Japan and South Korea.
Sharp reached an agreement a year ago with Hon Hai Precision Industry that would see the Taiwanese company take a 10 per cent stake but as the March 26 deadline nears there is little sign of the investment materialising.
Sharp said it did not expect the delay in Qualcomm’s second payment to have an impact on its business results or financial situation. However, shares in Sharp fell 2.5 per cent on Monday to Y307.
The Japanese electronics maker has Y200bn in convertible bonds coming due on September 30.
This article has been amended to reflect the fact that Sharp’s projected net loss for the current year is Y450bn.
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