Hon Hai, Sharp may build OLED plant in China: report

Taiwan-based Hon Hai Precision Industry Co. (??) and its subsidiary, Sharp Corp. of Japan, have been studying the feasibility of building an organic light-emitting diode (OLED) plant in Zhengzhou, in China's Henan Province, according to Japan's Nikkei Asian Review.

In a report posted on its website Sunday, the news outlet said that the plan to set up an OLED factory in Zhengzhou is aimed at supplying screens for the production of Apple Inc.'s next generation of iPhones.

The report said that Apple is expected to unveil a new iPhone that will sport the OLED screen later in 2017.

Hon Hai, known as Foxconn outside Taiwan, is currently running two broad production sites in Zhengzhou and in Shenzhen, Guangdong Province to assemble iPhones and iPads for Apple, making the Taiwanese manufacturer one of the most important suppliers to the U.S. consumer electronics giant.

The report said that the Zhengzhou plant is expected to help Hon Hai lower its costs, in particular transportation expenses.

It said that Hon Hai may team up with Sharp, in which the Taiwanese firm owns a 66 percent stake, to invest 100 billion Japanese yen (US$855 million) in the OLED plant project.

In mid-August 2016, Hon Hai competed a deal to acquire a majority stake in financially troubled Sharp for US$3.5 billion, making it the majority shareholder.

On Sept. 30, 2016, Sharp decided to invest 57.4 billion yen to install production facilities for OLED screens as well as components for the displays, and its OLED production is scheduled to start in April-June of 2018.

Market analysts said that Sharp's decision to invest in OLED production came from Hon Hai, which aims to strengthen its capability as an assembler of iPhones. Currently, Apple accounts for more than 40 percent of Hon Hai's annual sales.

According to a recent brokerage research note, Apple is expected to launch three new iPhone models this year and the 5-inch and 5.2-inch new iPhones could be equipped with OLED screens, accounting for 50-55 percent of the total iPhone shipments for 2017.

The research note shows that Hon Hai could receive 90 percent-95 percent of the orders from Apple to assemble the new iPhones with OLED screens.

In addition, analysts said, Hon Hai's efforts in pushing for Sharp's OLED investment also reflect the Taiwanese firm's ambitions to take on competition from South Korea's LG Display and Samsung Display, as well as Japan Display.

Source: Focus Taiwan News Channel