For a long time, technology companies in Japan have been a symbol of this country with their product quality being appreciated by the world. Sharp was one of the most prominent names when it owned many inventions that changed the technology industry in the world at that time. They are even more known as the sponsors of England’s top football club Manchester United in the 1990s.
However, to this day, Sharp is increasingly fading as one of the leaders of the technology industry, as well as facing numerous financial difficulties. So what was the reason that led them to the situation they are today?
Starting point and successful years
The name Sharp has not appeared since the beginning, when the founder of this corporation – Mr. Tokuji Hayakawa founded a metal workshop in Tokyo in 1912. Three years later, Mr. Tokuji invented the Ever-Sharp mechanical pencil. , later adopted as the official name of the Group for which he is chairman.
However, the 1923 Kanto earthquake caused the pencil business to collapse, leading to the company – then known as Hayakawa – to transform its business into technology products. The first products that the manufacturer made were the first generation radios in Japan that began to be sold widely two years after the earthquake.
The first radio produced by Sharp. (Photo: Sharp)
Just a few years after the mass production and commercialization of radio products across Japan, Sharp was researching a relatively new type of entertainment device at the time, television. Thanks to the microwave technology obtained from research during and after World War II, Sharp was able to build Japan’s first TV prototype in 1951. In 1952, the company introduced this new product. with the Japanese public and a year later became the first enterprise to mass-produce them in the country of the Rising Sun. Sharp’s first TV, TV3-14T, cost 175,000 yen (about $ 1663 at today’s exchange rates), 32 times the salary of a fresh graduate at the time. However, with the goal of bringing TVs to every household in Japan, Sharp continuously makes improvements to reduce the cost of this product; however, its TV price is still relatively high compared to the general level.
Sharp’s first TV – TV3 – 14T (Photo: WSJ)
Following the success of TV products, the company continued to develop other products such as portable computers, microwave ovens … In 1970, the company officially changed its name to Sharp and used this name until today.
Success followed by success, Sharp continued to participate in manufacturing screens, phones and solar cells, while also promoting TV production. In 1986, Sharp launched a production division for liquid crystal displays and invested heavily in this segment. The company opened two LCD manufacturing factories, Kameyama in 2004 and Sakai in 2009. The Sakai factory remains the only and most suitable 10th generation LCD monitor factory worldwide for manufacturing. Export panels 60 inches or larger. Not only that, Sharp was also Japan’s largest phone maker from 2005 to 2010 and was the world’s largest solar cell producer until 2006.
During its peak in 2008, Sharp reached $ 34.5 billion in revenue with about 50,000 employees working for the company; Enterprise’s products are present in 164 countries around the world. Sharp was also the sponsor of the Manchester United club from 1993 to 2000, an era where MU consecutively won domestic championships as well as achieved dramatic C1 trophies. The company’s revenue continued to increase during this period, marking a period of successful cooperation.
MU and Sharp have a successful partnership for 17 years (Image: Manchester United)
Despite such success, but like many other Japanese companies, instead of improving designs and reducing product costs, Sharp maintains its design and maintains high quality of products, in contrast to the trends of Chinese and Korean competitors. These rival companies create products with eye-catching designs and offer much more affordable prices even though the quality is not as high as Sharp.
Sharp’s decline began in 2008, when the global financial crisis hit demand for LCD screens. Along with that, the significant strength of the Japanese yen against other currencies, especially the Korean won, makes it more difficult to export electronics. In addition, the explosion of the Internet and online streaming and television services have increased the demand for TV products, which are heavily invested by Sharp through two display factories.
In Japan, the transition to Internet television has been extremely popular since 2011. Although the Japanese government has supported businesses like Sharp through stimulating demand by issuing coupons. lower prices for LCD TVs, since 2011, the year Sharp hit a record $ 36.8 billion in sales, difficulties have besieged this business.
After years of huge losses in its overseas TV business, in July 2015, Sharp sold its factory in Mexico to Chinese electronics maker Hisense for $ 23.7 million. The deal includes rights to use the Sharp brand and all its sales channel resources in North and South America, except for Brazil. This means Sharp has withdrawn from the TV market in the Americas, where it was the top LCD TV maker just a decade ago. The company’s market share is maintained at over 4% in North America, a relatively disappointing figure for Sharp. Even so, they are still the largest producer of this item in Japan.
2012 – 100 years since Sharp was founded, the company recorded the worst loss in history of 376 billion yen ($ 4.7 billion) in April 2020. Sharp manufacturing facilities capacity must be reduced, especially the factory in Sakai. Also in 2012, Foxconn – a famous outsourcing company in Taiwan bought 10% stake in Sharp for $ 805 million and has 50% ownership of the factory in Sakai. However, Sharp’s business results were getting worse. In 2016, its revenue was only 20 billion USD, or about half of 2011. The company had to make a series of decisions on staff reduction, production reduction to be able to balance finance, but still not really effective.
As sales continued to decline due to fierce price competition from Korean and Chinese rivals, Sharp was forced to make a decision to sell itself to Foxconn. In August 2016, FoxConn acquired a 66% stake in Sharp for ¥ 388.8 billion ($ 3.81 billion) to diversify its business portfolio into cell phone panels.
Sharp is still supplying display panels to major smartphone manufacturers including Apple – traditional partner with Foxconn’s largest. Selling itself to Foxconn is a smart move for Sharp when in 2018, for the first time in years, the company had a positive profit thanks to the drastic restructuring of Foxconn’s manufacturing segments.
Foxconn acquires a majority of Sharp to expand its business (Image: Financial Times)
Difficult to now
From 2017 to the end of 2019, Sharp’s revenue is maintained at $ 20 billion, but after-tax profit has improved quite well. Net profit for the current business year (as of March next year) will increase 2.4 times to 50 billion yen ($ 473 million) as their supply chain – which is disrupted by quarantine orders – becomes back to normal. The company forecasts sales to increase 3.5% to 2.35 trillion yen (about $ 22 billion) and operating profit to increase 55.4% to 82 billion yen ($ 779 million), with the opening Gradually affected economies due to the spread of the virus.
In addition, in an effort to compete with other personal computers around the world, Sharp acquired the remaining stakes of Dynabook – Toshiba’s laptop maker in August 2020, making Dynabook become wholly owned subsidiary of Sharp. Sharp hopes to bring the laptop brand back to its heyday, after years of being dominated by Chinese brands.
Sharp bought dynabook to develop the PC business. (Photo: Nikkei)
Thus, from a leading TV manufacturer in the world, due to the conservative thinking of its leaders and the rapid rise of rivals from Korea and China, Sharp is now only a company. subsidiary of Foxconn Group. Although still retaining some core businesses, today, Sharp is no longer a big man and an icon of Japan as it used to be. Although it is still working on continuous reforms under Foxconn’s drastic reforms, it will take a long time before Sharp regains its place in the past.