Sharp may seek state-backed aid for LCD unit

Struggling Japanese electronics giant Sharp Corp is said to be seeking government-backed funding to restructure its liquid crystal display (LCD) unit, Singapore's Business Times reported citing sources.

Osaka-based Sharp, which is poised for its third annual loss in four years, is planning to approach the Innovation Network Corporation of Japan (INCJ), a fund launched by the government in the aftermath of the global financial crisis to keep the country's technology sector competitive for investment in the company.

Sharp, a display supplier to US technology giant Apple Inc, plans to spin off its unit which makes LCD panels for smart phones and tablet computers, for faster decision making and improved performance.

The company is expected to seek ¥100 billion ($840 million) from INCJ to spin-off its LCD, according to a Nikkei report yesterday.

According to sources, Sharp has also approached Japan's domestic corporate turnaround fund backed by Mizhuho Bank, Bank of Tokyo-Mitsubishi and Development bank of Japan for financial help.

Mainly funded by the Japanese government, INCJ also gets support from companies.

It is the largest shareholder in LCD maker Japan Display Inc, which also supplies screens for Apple's phones and tablets. The fund holds a 36-per cent stake in the company which was formed through the merger of the panel business of electronic giants Sony Corp, Hitachi Ltd and Toshiba Corp.

Commenting on the media reports regarding the spin-off and funding from INCJ, Sharp said in a statement, ''We are currently considering various possibilities for fundamental structural reforms, including LCD business, but there are no facts of specific decisions made at this time.''

''The new medium-term management plan is currently reviewed and will be announced around May this year,'' the statement said.

Further to the funding news, shares in Sharp surged almost 7 per cent, its biggest intra-day gain in five months.

About a fortnight ago, Taiwanese electronics giant Foxconn, which failed in its attempt to secure an investment deal with Sharp two years ago, said that it was still exploring investment and partnership opportunities, which could include technology licensing.

''Any such investment would have to be based on mutually beneficial outcomes, in particular, whether Foxconn will have the right to participate in business management to realize the shared goal of achieving sustainable business growth and returns on investment,'' Foxconn had said.