Sharp to miss investment deadline issued by Qualcomm -- report
Reports suggest that Sharp may soon be under even more financial pressure as production delays result in missed investment deadlines under a $120 million pact.
After failing to advance far enough toward a manufacturing process goal, Sharp says that it will miss a March 29 deadline to receive the second half of a $120 million investment from chipmaker Qualcomm.
In December, the ailing Japanese electronics maker said it reached a partnership with U.S.-based Qualcomm, which agreed to invest $120 million in a project to jointly develop display panels. However, as reported by Reuters, Qualcomm's conditions included the stipulation that Sharp meet strict deadlines to fabricate power-conserving screens, and as a result, Sharp will not yet be granted the remaining $60 million the San-Diego based firm originally pledged.
In addition, Qualcomm has insisted that Sharp must make an operating profit in the second half of 2013, and at least $1.05 billion of net assets have to be in place.
The screens that Sharp has to produce were developed in conjunction with Pixtronix, a subsidiary of Qualcomm. The panels are focused on conserving power through Pixtronix's low-power MEMS (micro electromechanical systems) displays and Sharp's IGZO (indium gallium zinc oxide) technology.
Instead, both firms are falling back to a deadline of June 30, according to Reuters. Although this gives Sharp time to get its act together, if the electronics maker does not produce the jointly developed screens in time for the second deadline, it is likely to put even more financial pressure on the already struggling company.
This month, South Korean firm Samsung, or about $111.3 million in Sharp for roughly a 3 percent stake in the company. In a press release announcing the deal, Samsung said the investment was aimed at building up "mutual trust" in the LCD display business as well as offering Sharp a little help getting out of its financial mire -- although it won't be nearly enough. Sharp currently supplies display panels for Samsung products.
Sharp must pay off a $2.1 billion convertible bond in September this year, and reports suggest that the Japanese company has been forced tototaling $313 million to try and stay afloat.