Television and display maker Sharp is in serious trouble, with crushed profits and huge
losses hanging around the company's neck like a lead weight. But one analyst
suggests that Apple used its massive cash pile to make sure the company survived
to deliver parts for the new iPhone
Apple and Sharp have been thrown together thanks to the ongoing
legal feud between Apple and Samsung. Apple, wanting to lessen its reliance on
Samsung, turned to Sharp for displays for its new iPhone. But huge problems at
the company had put the delivery of these screens in jeopardy.
Apple and its massive $100 billion plus cash pile.
Asymco analyst Horace
Dediu suggests that Apple may just have pushed over $2 billion to
Sharp during the last quarter to ensure that the supplier survived. Digging
through the financial data, Dediu points to expenditures at Apple that were over
$2.3 billion higher than forecast. Dediu also found that Apple paid for some
of its acquisitions "through uncharacteristic or unorthodox
Apple put the spending down to "product tooling, manufacturing
process equipment, and infrastructure," but Dediu's theory is that at least some
of that money went to Sharp.
evidence points to the asset being production equipment (or even a whole plant)
previously owned by Sharp," Dediu said. "Sharp is a key supplier of screens to
Apple but is also in financial distress. Sharp has also been the object of an
intended investment by Foxconn [Hon Hai]. That deal fell through as Sharp's
finances deteriorated. My guess is that these attempts to shore up Sharp are
directed by Apple to ensure both continuity of supply and a balanced supplier
base (offsetting Samsung, another supplier).
out that if Sharp had entered into bankruptcy, it's quite possible that its
production plants could be grabbed by creditors and shut down, irrespective of
any deal with Apple. If this had happened it could have resulted in the iPhone 5
being delayed, something Apple would have wanted to avoid at all