Sharp's new owner Foxconn to shut overseas units of Japanese firm and cut jobs

Foxconn plans to close costly and redundant overseas operations of its new acquisition Sharp and bring to market products using Sharp’s valuable patents and technology as quickly as possible, said the chief of the world’s largest electronics manufacturer.

Terry Gou, who founded Taiwan’s Hon Hai Precision Industry, the formal name of Foxconn, made the comments on Wednesday at his company’s first annual general meeting since announcing the purchase of two-thirds of the money-losing Japanese display maker for US$3.5 billion.

Mr Gou said all legal procedures for the acquisition will be completed this month, and that new management will take charge of Sharp on July 1.

“We will start overseas,” Mr Gou said of restructuring Sharp. “Those improper, high-cost joint ventures overseas, we will close them to reduce a lot of the operational cost, which will lead to lower sales prices.”

The comments come as Foxconn seeks to build on Sharp’s technology and branding to strengthen its pricing power with its major client Apple.

For Sharp, the takeover is a lifeline at a time when Japan’s technology companies, once synonymous with cutting-edge electronics, are being out-manoeuvred by upstart Asian rivals.

Mr Gou said speeding up the transformation of Sharp’s patents into technologies that yield commercially viable products will be part of the initial restructuring, as will a metrics-based review of all Sharp staff.

In May, Foxconn told Sharp employees that lay-offs were a must and would be carried out “responsibly and sensitively”.

A person familiar with the matter told Reuters at the time that the cuts could total 3,000 in Japan, and more when Sharp’s global operations are included.

Mr Gou also said Foxconn sees growth potential in Sharp’s home appliances business. He said Foxconn would work to expand sales channels in the United States and that his company is discussing the matter with a major US wholesaler.

Foxconn will also work to rebuild Sharp’s semiconductor business, an area where Sharp once held many patents but sold some to plough resources into display technology, Mr Gou said.

Another immediate task is bringing Sharp’s financial management in line with methods used at Foxconn, he said.

For example, twice a year, Foxconn will review what Mr Gou called the three bads – accounts, personnel and materials.

“We have very conservative accounting principles,” he said.

Foxconn’s accounts are checked from the bottom up, unlike Japanese companies which tend to have top down financial management that may involve fulfilling profit targets, Mr Gou said.

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