5 reasons why Foxconn wants Sharp

1.iPhones

Foxconn already assembles most of Apple Inc.’s iPhones and supplies some components such as metal casings for the devices. It’s also seeking to supply iPhone screens, as they are the most expensive parts of the devices and provide better profit margins than assembly work. Sharp is one of Apple’s iPhone screen suppliers.

2.Diversification

Foxconn has been seeking to diversify from contract manufacturing, a low-margin business, into high-end component production. Sharp’s display technology can help Foxconn make inroads in screen-production and reduce its reliance on contract manufacturing.

3.Brand

While Foxconn doesn’t make products under its own brand, it has been seeking alternative paths to boost its brand. The Sharp brand is well-known and could be valuable if Foxconn can stem the company’s losses.

4.Compete with Samsung

Foxconn wants in on next-generation displays which Apple is expected to begin using in future iPhones. Samsung is a primary supplier of organic light emitting diode screens, which are thinner and brighter. With the Sharp purchase, Foxconn could invest in next-generation technology and become a key supplier.

5.History

In 2012, Foxconn Chairman Terry Gou personally invested in one of Sharp’s production facilities in Japan. The plant has since become profitable, and Foxconn wants closer collaboration.