By Lee Minji
SEOUL, March 7 (Yonhap) -- Samsung Electronics Co.'s purchase of a 3-percent stake in Sharp Corp. is a boon for the South Korean tech giant as the deal will help it reduce spending on panel-making facilities and expand its footing in the larger-screen TV segment, analysts said Thursday.
Samsung Electronics, the country's biggest technology firm by market cap, announced Wednesday it has signed an agreement to buy shares in Sharp valued at 10.4 billion yen (US$110.8 million) as part of efforts to strengthen the partnership.
The Suwon, South Korea-based company said the deal was aimed to "fortify the partnership" between the two companies and "secure a steady supply of liquid-crystal display (LCD) panels from diversified sources."
Sharp operates manufacturing facilities in Kameyama and Sakai, Japan, where it produces small and mid-sized LCD panels as well as products sized 60-inches or larger.
Market watchers said the new alliance is set to stabilize LCD supply for Samsung Electronics' TV business as well as financially prop up Sharp, which suffered a 450 billion yen loss in fiscal year 2012.
"Samsung's stake acquirement is likely to create a value 100-times bigger than the initial investment," said Hyundai Securities Co. analyst Kim Dong-won.
Kim said Samsung will be able to expand its market share in the 60-inch and larger TV sector, save costs for LCD facility investments and use Sharp's oxide technology.
Sharp has already been a major supplier of 40-inch screens to Samsung, with more than 400,000 units shipped to the South Korean company in the third quarter of 2012, according to the data by DisplaySearch.
IBK Securities Co. analyst Eo Kyu-jin said the move will hone Samsung's premium TV strategy amid growing demand for larger TVs.
In a bid to tide over weakening growth in the global electronics market, Samsung has been beefing up efforts to promote premium TVs.
"The premium market is where we invest the most and where we can perform the best," Samsung's TV business executive Kim Hyun-suk said in a media conference, forecasting the premium segment to grow roughly 30-40 percent down the road.
It is also expected to have limited impact on Samsung Display, the display-making affiliate of Samsung Electronics, since 60-inch or larger panels account for a small portion of its production, according to Eo.
Market watchers said the Samsung display arm is likely to focus more on developing AMOLED TVs while Samsung Electronics secures LCD supplies from Sharp.
Meanwhile, analysts said the Samsung-Sharp deal will go beyond the two companies and have a positive impact on LG Display Co., the world's second-largest display maker that supplies parts to Samsung's smartphone rival Apple Inc.
"Apple is likely to scale back supply from Sharp for its key devices," said Choi Ji-soo, an analyst at Kyobo Securities Co.
Choi forecast LG Display to have a stronger footing for yet-to-be released Apple products such as the iPhone 5S and iPad mini with Retina display as it is one of the few companies that has the technology to churn out high-resolution panels.
Shares of Samsung Electronics fell 2.56 percent to 1,520,000 won on the Seoul main bourse, while LG Display gained 1.61 percent to 31,500 won.
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