NEC Display Now 66%-Owned By Sharp (Foxconn) In New Joint Venture
March 25, 2020 by Dave Haynes
NEC and Sharp have agreed to create a joint venture that combines its subsidiary NEC Display Solutions with Sharp.
The press release on this just-announced JV is not all that enlightening, saying: “The Sharp-NEC joint venture will allow both companies to build upon their strengths and address the visualization needs of their global customers.”
What details are provided pretty much say Sharp, and its owner Foxconn, have purchased majority control of NEC Display.
Under the terms of the transaction, NEC will transfer 66% ownership of NDS to Sharp, and retain a 34% equity stake in the business. The joint venture will continue to provide NEC branded products. NEC will also continue to sell the joint venture’s products and solutions to its customers around the world. The transfer is scheduled to be concluded on July 1st, 2020.
This seems to suggest you will continue to see the two brands marketing and selling separately, but these things have a way of changing. When trade shows resume, at some point, I’m not convinced you would see Sharp and NEC booths separately, unless they are focused on different things.
In the context of digital signage and pro AV display, at least in North America, NEC Display would be the stronger, more used brand. I think it’s the same in Europe, but can’t really say about Asia or the rest of the globe.
The JV gives Sharp and Foxconn access to products they don’t now have – like direct view LED, premium projectors and desktop monitors. On the flip side, NEC doesn’t do TVs or consumer products, and Sharp is already touting 8K.
Both companies have collaboration products like digital whiteboards, and both have interesting but different AI and IoT-based capabilities, like NEC’s ALP shopper intelligence platform, that could possibly be linked or leveraged.
This would have seemed an unlikely tie-up to be led by Sharp a few years ago, as Sharp was struggling. But it was acquired by Taiwan’s Hon Hai Precision Industry in 2016. Hon Hai is known in the west as Foxconn, which is the world’s largest contract electronics manufacturer.
More not terribly enlightening executive comments:
“NEC offers one of the broadest visual solutions portfolios in the industry, and with a consultancy-led sales approach, NEC is recognized as a trusted advisor and total solutions provider,” says Hisatsugu Nakatani, President, NEC Display Solutions, Ltd. “This joint venture between Sharp and NEC Display Solutions will bring even greater value and benefits to customers and partners by extending our state-of-the-art product portfolios together with a range of professional service offerings. Sharp and NEC Display Solutions follow the same strategic approach to the future of visual solutions, focusing on superior customer satisfaction enabled by high-quality products, sales leadership excellence and committed relationship building.”
“The combination of Sharp’s and NDS’ international strengths is mutually complementary,” says Fujikazu Nakayama, Senior Executive Managing Officer, Sharp Corporation and BU President, Business Solutions BU. “We expect this agreement to result in a wide range of synergies, including economies of scale and business expansion in new categories, including an 8K+5G Ecosystem. Sharp believes that developing NDS as a joint venture with NEC will contribute to our business growth by enforcing our BtoB business and expanding sales.”
Synergies!
Munich-based industry consultant Florian Rotberg, of invidis, has been up several more hours than I, and given this news some solid thought:
“The merger of Sharp and NEC Display Solutions is a logical step, even independently of the coronavirus crisis. NEC Display has been holding its own against its two Korean competitors Samsung and LG for years. However, NEC is the only top three supplier not to have its own display production. As a result, the Japanese had to buy their products from Korean competitors or contract manufacturers such as Foxconn or TPV. But both the world’s largest contract manufacturer Foxconn and competitor TPV have their own digital signage brands – Sharp and Philips.”
“With the merger of NEC and Sharp’s visual business, NEC now has direct access to its own production capacities. This is because the market is changing rapidly, and Samsung and LG are also struggling with losses in the display business and increased competition from Chinese suppliers. The world’s largest display panel manufacturer is not one of the top 3 display brands, but China’s BOE.”
“For NEC Corporation, the sale of a majority stake in the display subsidiary to Sharp/Foxconn is a sensible strategic decision. In the future, the focus will no longer be on IT hardware, but primarily on IT solutions and platforms.”
I wish my former colleagues and friends on both sides of this business venture the best of luck in the times ahead.