Samsung sues Sharp for halting LCD panel supply
By Lee Min-hyung
Samsung Electronics has filed a compensation suit against three Japanese liquid crystal diode (LCD) panel manufacturers, in response to their decision to halt supplies to the company, according to Japanese media and industry sources here, Sunday.
The companies include Sharp and Kuroda Electric. Following their decision, the Seoul-based technology giant last week filed an arbitration request with the International Chamber of Commerce (ICC) in New York to seek $429 million (504.5 billion won) in damages, according to multiple reports from Japan.
Last September, Sharp signed a contract with Samsung to supply 6 million LCD TV panels to the Seoul-based company this year.
The compensation suit comes a month after Sharp, which was acquired by Taiwan-based electronics supplier Hon Hai, decided to stop supplying LCD panels to Samsung, in an apparent move to revive Sharp’s sagging TV business and take advantage of increasing demand for the panels.
This may not cause significant damage to Samsung because Sharp’s panels make up less than 10 percent of Samsung’s TV products. But the unexpected contract withdrawal may leave Samsung in a dilemma, with Hon Hai expressing confidence in expanding its TV business in Southeast Asia ― including China.
“Nothing official can be confirmed over the issue,” said a Samsung Electronics official, declining to comment further.
For the time being, Samsung is expected to fill the void from LG Display. The two Seoul-based firms are reportedly in advanced talks to finalize a contract, but both parties refused to confirm the move, citing the terms of the deal.
Sharp’s latest move comes amid soaring demand for LCD TV panels. Due to the strong panel demand, Samsung Electronics is not seen as a core profit booster for Sharp. In addition, with Hon Hai showing signs of launching a new TV brand soon, the relationship between Samsung and Sharp has not been on good terms in recent months.
In September, Samsung Electronics sold its 0.7 percent stake, or 358 million shares, in Sharp. At that time, Samsung dispelled rumors that the move came amid an uncertain business partnership, and said the decision had nothing to do with LCD supplies from the panel manufacturer. But the latest lawsuit appears to show otherwise.
The Taiwan-based firm, also known as Apple’s core customer for its iPhone series, purchased a 66 percent share in Sharp last year to become the largest shareholder in the struggling Japanese technology firm, in a bid to develop its own TV brand backed by the latter’s expertise as a decades-long TV manufacturer.
Sharp previously unveiled a plan to double its LCD TV sales to 10 million in 2018. A joint venture between Hon Hai and Sharp is also considering building an LCD panel facility in China with an investment of about $8.8 billion.