Sharp is rejected by Samsung Electronics yet again

Sharp, which suddenly stopped its panel supply after being acquired by Foxconn in Taiwan, offered to resume supply of LCD panels for TV to Samsung Electronics earlier this year, only to be rejected.

A former executive of the Samsung Electronics Visual Display (VD) Business Department officially commented, "Sharp’s TVs are not selling well, so it is trying to look for TV companies to sell panels to (that cannot be disposed of by its own brand), but we’re not welcoming it as we don’t want to be taken advantage of."

Sharp, after being acquired by Foxconn (Hong Hai Precision Industry) at the end of 2016, has stopped supplying TV LCD panels to Samsung Electronics. The abrupt action was made to increase sales of its own TV brand by increasing the in-sourcing panel purchase rate of its subsidiaries. The TV industry's average in-sourcing ratio was 30% in contrast to Sharp's in-process ratio of over 90% in 2017.

The prices of LCD TV panels at that time, which were increasing, seemed to have affected the supply interruption. The company intended to raise its sales volume by lowering its TV prices by focusing on in-sourcing.

The average selling price per square meter (ASP) of Taiwanese panel maker AUO, whose flagship product is LCDs, bottomed out at $340 in 2Q 2016 and climbed significantly to $372 by 3Q and $413 by 4Q, then peaked at $421 in 1Q of 2017. After the peak, however, it continued to decrease. It dropped to $345 in the fourth quarter of 2018 and fell to the price level of the first two quarters of 2016.

Samsung Electronics purchased a small number of LCD panels from LG Display after the supply disruption by Sharp. A Samsung official said, "None of them were officially released in TVs. We stopped at the R&D stage." "During the discussion on panel supply with LG Display, there were technological difficulties such as module configuration, and the supply ratio from Sharp was small enough at the outset that other panel makers were able to fill in the panel shortage."

In terms of Samsung Electronics' VD Division's share of LCD TV panels, Samsung Display has the highest share of mid-30% share. Then, Taiwan's AUO and Innolux, and Chinese BOE's account for between 15% to 20%, while CSOT China has bewteen 10% to 14%. Samsung have received panels for high-end TV products mainly from Samsung Display and AUO, while BOE and CSOT are known to supply low-end models. Innolux, another subsidiary of Foxconn, is affiliated with Sharp.