Samsung has long outsourced a sizable percentage of its liquid crystal display (LCD) panels from sharp, but this may come to a halt soon, according to reports.
Sharp has reportedly given Samsung a heads-up that its supply of LCD panels for the South Korean electronics company will stop beginning next year.
Sharp Stops LCD Panel Supply For Samsung
Sakai Display Products, a Japanese LCD joint venture between Taiwan's Hon Hai — known more widely as Foxconn — and Sharp has already notified Samsung of the impending halt, Nikkei Asian Review reports, citing sources in the industry. Samsung, however, is still likely to receive 2 to 3 million of the 40 and 60-inch LCD panels in 2016 from Sakai Display.
The split-up possibly benefits Sharp and Foxconn's join TV venture as it attempts to challenge Samsung in the TV market.
Sharp aims to double TV sales sold to over 10 million beginning April 2018, an ambitious undertaking that would require Sakai Display more panels for Foxconn and Sharp's own TV business venture.
Cutting of ties with one's biggest customer is a bold, if not risky, move, but a Sharp official has said that it's "fairly certain" that offloading Samsung is no trouble — it will redirect the TVs to other customers and it will be using the panels in its own TV business. The success of this recourse remains to be seen.
Sharp has regularly supplied Samsung 4 to 5 million TV panels annually, about 10 percent of Samsung's total TV production. Both companies had once operated together under an amiable relationship, with Samsung even investing $90 million in Sharp in March 2013, perching it on the fifth spot in Sharp's list of largest shareholders. But after Hon Hai announced its intention to acquire Sharp for JPY 388.8 billion, roughly more than $3 billion, in August this year, Samsung sold its entire stakes in the company in September, The Investor reports.
Turning To LG
Anticipating the probable repercussions, Samsung's Future Strategy Office has been reported to have held an urgent meeting and decided to ask LG to occupy the space Sharp will vacate, a surprising move considering both Samsung and LG compete in almost every front, including electronics and displays.
It's still uncertain whether LG has agreed to replace Sharp as Samsung's supplier of LCD panels. Reuters has already reached out to all companies, but none so far have elaborated on the reports. However, expect due coverage when one, or each, breaks word about the news.