A few days ago, Sharp announced the financial report for the fourth natural quarter of 2016. The financial report showed that Sharp achieved a profit of 4.2 billion yen in this quarter, while Sharp lost 24.7 billion yen in the same period of 2015. This is also the first quarterly profit achieved by Sharp since July 2014. Sharp's full-year profit forecast has also increased, from the previous 25.7 billion yen to 37.3 billion yen.
Before Guo Taiming took over Sharp, Sharp had been in a loss for a long time. In August last year, Foxconn spent about 3.7 billion US dollars to acquire a two-thirds stake in Sharp. Since then, Guo Taiming regards profit as the first principle of Sharp.
The main reason for achieving profitability comes from cutting costs. Sharp has significantly adjusted its suppliers after the acquisition, and turned to Foxconn's parts procurement capabilities to achieve raw material supply.
In addition, the exit of the sluggish North American TV business has also contributed to Sharp's earnings.
On the other hand, the price increase of LCD panels has contributed a lot of profits to Sharp this season. Panel prices have continued to rise in the past few months as Sharp's competitor Samsung shut down its production line and LCD panel inventory in the industry has fallen. And because of the popularity of large-size panels, the upward trend in future panel prices is likely to continue for some time.
In order to achieve sustainable profitability, Sharp has recently become a big move. At the end of December last year, Foxconn and Sharp announced that they planned to build the world's largest LCD panel factory, initially located in Guangzhou, with an investment of nearly 9 billion US dollars. Soon, Guo Taiming also said that he will invest 7 billion US dollars in the construction of LCD panel factory in the United States.
Foxconn also said it would help Sharp to produce OLED screens on a large scale, vying for Apple's orders. Currently, Apple's OLED screen is mainly provided by Samsung.
Not only that, but Foxconn also hopes that Sharp will reinvigorate its TV business in the future. In 2017, Sharp’s TV target production doubled to 10 million units a year.
The drastic reforms helped Sharp to achieve the small goal of profitability. In the future, Sharp will challenge the giant hair of Samsung, LG and other industries.
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