Samsung announced today that it had bought a 3 percent stake in display maker Sharp for 10.4 billion yen ($111 million). As Bloomberg News points out, the deal is a slender lifeline for Sharp, which has forecast a record loss of 450 billion yen for this year. The company has been desperately trying to raise funds to stave off collapse, selling shares to American semiconductor company Qualcomm and trying but ultimately failing to sell a stake to China’s Foxconn.
The roots of Sharp’s frenzied deal-making are straightforward enough—the company failed to foresee and prepare for the slowdown in demand for TVs. But the symbolic and financial ramifications are broader. Sharp is a Japanese tech company, and an iconic one at that, and in its desperation it has had to go hat in hand to first a Chinese manufacturer and now, in Samsung, a Korean one. Few things could be a sharper illustration of where Japanese now stands in relation to two neighbors it once dominated economically—and, for the first half to the 20th century, militarily.
And then there’s Apple: Samsung’s target and competitor in the smartphone and tablet wars. Apple is Sharp’s biggest customer, the company makes the displays for iPhones and iPads. But Sharp also supplies displays for Samsung devices. Samsung says that it is not going to be involved in management, but it’s not hard to imagine the Korean company getting priority in displays over Apple. One of the key advantages Apple has always had is its vice-like control over its suppliers. This deal loosens that.
