The world of digital technologies is a battlefield. M&A (Merger&Acquisition), quarrels, alliances soon terminated, agreements in the balance. The last - so to speak - on which we give a report concerns Sharp and Hisense and in the second row Apple, Toshiba and others. Behind these movements there is the urgent need of large Chinese companies (but not only) to use illustrious brands to raise prices and quotas. Sharp two years ago, in the throes of a long-standing crisis, closed a five-year agreement with the Chinese giant Hisense to which it transferred the Sharp-branded production license of LCD and OLED TVs for America.
In the meantime, however, the crisis that had pushed Sharp to this step did not seem to be resolved, so much so that the Japanese giant signed another agreement in 2017, with the Taiwanese Foxconn, its component supplier, for a collaboration. Which in reality was a real acquisition, closed, among other things, at a small amount, around 3,5 billion dollars, after the tough Taiwanese president, Terry Gou, had obtained a colossal discount. Not only.
APPLE BLOCKS SAMSUNG
Behind this official release of Foxconn in the rarefied world of M&A, it seems that Apple worked hard, which had every interest in securing Sharp, i.e. one of the three (together with LG Display and Japan Display) strategic display suppliers LCD for Apple smartphones. Which is preparing for the gigantic replacement of LCDs with OLED technology and therefore has the absolute need not to have interruptions or limitations in the logistics chain.
The intervention of the…hound Tim Cook in fact obtained a double result: the certainty of hi-tech supplies for Apple and having prevented the competitor Samsung from acquiring Sharp. An operation for which the Korean chaebol was preparing with the assent of the Japanese government in agreement with the INCJ sovereign wealth fund. The conditions set by Terry Gou - considered one of the most aggressive managers in the sector - turned out to be tougher than what Sharp expected but he has to accept them due to the worsening economic situation.
SHARP, TOSHIBA, HITACHI, THE END OF THE JAPANESE BIG
Foxconn assumes complete control of Sharp which, in America, attempts to revise the agreement with Hisense complaining of a lowering of the quality and performance of Sharp-branded TVs manufactured in China by Hisense, with consequent -according to Sharp- damage to the image of the company and Japanese TVs and with the infringement of various patents. "But how - protest the Hisense top management - have we doubled sales and we are prevented with an injunction from continuing in such an advantageous operation?".
And to avoid being left without a Premium brand, they drop 113 million dollars in one fell swoop by securing the Toshiba brand license for TVs. However, Sharp, no longer controlling the situation, in mid-February, withdrew all lawsuits against Hisense. Also sharing the remains of the Japanese multinationals is Midea, a rapidly growing Chinese giant, which, in turn, closes an agreement with Toshiba to use the brand for the entire majaps (large household appliances) and air conditioners sector.
The loser is the Japanese government which had tried in vain with the sovereign wealth fund to merge the activities in the household appliances sector of Toshiba, Sharp and Hitachi to create a group capable of competing on world markets with Whirlpool, Electrolux and Haier. Meanwhile in Europe, the Turkish Vestel, a powerful contractor for big European companies and retail chains, acquires the license (for Europe) of the Sharp brand for all household appliances, thus leaving the uncomfortable role of contractor.
And from Toshiba he buys the license to use the prestigious brand for the millions of OLED TVs that come out of Turkish factories. The billion-dollar world war to control gigantic shares of the world Hi-tech market on the eve of the IoT and smart home boom is only just beginning. And it will definitely be no holds barred.
Source: Paula's house
