Hon Hai pushing Sharp to set up LCD factory in North America

Updated : 21.03.2017 / Category Capsule

Dark clouds are looming over a plan by Taiwan's Hon Hai group to construct a large liquid crystal display factory in North America with its Japanese subsidiary, Sharp Corporation, playing a central role.

Hon Hai Precision Industry Chairman Terry Gou announced the \800 billion plant construction plan in late January, but the group has not yet established a supply chain to procure equipment and components necessary to manufacture LCDs, informed sources said.

Unlike Japan and the rest of East Asia, North America does not have an LCD industry per se. Consequently, equipment and component makers must build new factories to make products tailored to the LCD plant if they want to join the project. Many equipment and parts markers, however, appear hesitant to get involved because of the massive investment required. "Unless we are offered a lucrative deal, we will not join," an insider at a major manufacturer said.

In North America, Chinese and South Korean makers are pushing ahead with building plants for manufacturing large LCDs, intensifying competition in the market there. Furthermore, Nikon Corporation, the sole company able to provide exposure equipment indispensable for forming circuits for LCDs, has already received orders up until 2020, which would mean Sharp has to wait years for this equipment, according to an LCD industry insider.

Sharp, officially at least, is still considering whether to join the project. But Gou nonetheless said the group aims to make the plant operational in 2020, a bold statement some observers believe is part of a carefully crafted plan that has longer-term objectives. "He is trying to win U.S. government and industry support for the group's business by trumpeting a huge project," according to an industry analyst.

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This is a translation of an article from the March 2017 issue of Sentaku.