Foxconn CEO Terry Gou (C) embraces Kozo Takahashi (R), president of Sharp Corp., and Foxconn Vice President J.W. Tai

Sharp deal drives wedge into Japan Inc.

Thirty years ago, Japan’s corporations seemed unstoppable. A lot has changed since then, as shown by the takeover last month of one of the country’s manufacturing icons, Sharp. The landmark deal challenged Japan’s state-guided industrial model and may unleash a wave of foreign investment.

Just how formidable Japanese competitors appeared to American companies in the 1980s was described by the late Andy Grove, then CEO of chip maker Intel. “The quality levels attributed to Japanese memory chips were beyond what we thought were possible. We were clearly behind. As the eighties went on, the Japanese producers were building large and modern factories, amassing a capacity base that was awesome from our perspective. Riding the memory wave, the Japanese producers were taking over the world semiconductor market in front of our eyes.” Intel almost failed, like IBM a few years later, ruthlessly outcompeted by electronics giants Fujitsu, Hitachi, NEC, Panasonic, Sanyo, Sharp, Sony and Toshiba.

While most of those firms are still around today, their combined profit is less than that of Apple or Samsung Electronics alone. According to the Japanese establishment, the whole electronics industry urgently needs to consolidate, combining whole companies or individual business units. The core belief is that integrating two or more weak entities can create a strong firm thanks to economies of scale.

Thus, Panasonic acquired financially ailing Sanyo in a government-brokered deal in 2010. On the business-unit level, companies such as Renesas (semiconductors and microcontrollers) and Elpida (dynamic random-access memory) were cobbled together in the early 2000s. Neither venture proved successful.

Japan Display, created by merging the liquid crystal display (LCD) divisions of Hitachi, Sony and Toshiba, was established in 2011 with support from a government-sponsored investment fund, Innovation Network Corporation of Japan (INCJ). Thanks to the explosive growth of smartphone demand, it fared somewhat better.

Unlock the report
8.95 EUR
Secure, instant payment by credit card
Dr. Stefan Lippert
It is also possible that the Foxconn-Sharp deal was an isolated development
read more about it in the report
Who will benefit?
  • Report is targeted to the decision makers in cross country manufacturing – suppliers, manufacturers, logistics.
  • Also considered useful for the administrative university facilities, to better understand the possible effects of current decisions.
By clicking "I Agree" below, you acknowledge that you accept our Privacy Policy and Terms and Conditions. Feel free to check out our policies anytime for more information.
I agree