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As Sharp’s Display Business Shrinks, There Are Some Positives
December 22, 2019
 
According to Mizuho, Sharp’s display business is recovering as it shifts emphasis from TVs and smartphones to monitors, notebooks and watches. They have been getting Apple’s attention, given the expectations for its IGZO technology and how JDI and LG Display (small and medium-sized displays) are struggling. However, the OLED factory in Sakai (G4.5) to expected to continue posting annual losses of at least ¥5.0b. But they are progressing towards test production Apple Watch panels. While this will still be some way in the future, if Apple does use Sharp’s panels in its Apple Watch, it will be positive for Sharp’s profits.  Mizuho Securities believes that Sharp is recovering from its poor positioning in displays as fixed costs are falling as G4.5 and G4 factories are gradually shut down. Demand from these operations will shift to the Kameyama No. 1 plant (LTPS, Smartphones, and automotive) and Kameyama No. 2 plant (IGZO, NB, and tablets). At the Kameyama No. 1 plant, production of the iPhone 11 and SE2 panels are expected to remain stable in FY3/21 and the company will shift to the production of automotive components. The Kameyama No. 2 plant will expand to the production of monitors, having introduced IGZO to its monitor products. Amortization costs are low, at roughly ¥20.0b and there is a small chance of a big drop in earnings when economic conditions turn downward. In the camera modules segment, Sharp has over 80% of the market share of the iPhone 11, which are selling well, and the company should supply cameras to two of the 2020 iPhone models that have dual cameras.