Apple and Sharp are in dispute over display production facilities

Sharp has been a major supplier of Apple displays for quite some time, with an entire plant dedicated to this purpose. However, the company is looking to buy the equipment back from Apple and is offering 30 billion yen (about $293 million).

The main reason behind the decision seems to be Sharp's intention to diversify its production and shift away from supplying only to Apple. From this perspective, Chinese manufacturers are the main potential markets for Sharp's production and Apple is apparently amenable to the idea of selling the facilities given one condition: that Samsung doesn't get any of the screens produced by Sharp in these facilities.

Although Samsung mostly utilizes OLED screens in most of its products, some devices still use LCD screens and the company may have benefited from Sharp's products.

An agreement has not yet been reached and it seems unlikely as the manufacturer is not keen on accepting the “embargo”. Apple has not yet commented on the deal.

Nowadays Sharp is busy producing iPhone 6 screens for Apple and Kameyama Plant No. 1, the one that Sharp wants to buy back, is running with an operating rate above 90%. The company is said to invest another 35 billion yen this year to increase the production of their IGZO panels.

Source: CNET | Image via GSMArena

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> Apple has apparently indicated it will only agree to the sale if Sharp agrees not to supply displays to Samsung

That is so downright childish. I won't reward a company displaying such arrogance and childish behavior--which is exactly why I've never bought a product from them.

The article fails to mention this:

Apple contributed roughly half of the 100 billion yen (~$1 billion) cost to convert the plant from large TV panels to small iPhone displays in 2012, with Apple owning the plant's equipment.

Yes, so now they want to buy the equipment for roughly 1/3 the price, and wedge Apple out by producing displays for other customers.

Sharp probably would have been gone by now if it weren't for Apples contributions to the Plant, and maintaining the workforce.

Perhaps Apple should have bought them outright, which was the rumour floating around a while ago.

Binary said,
Yes, so now they want to buy the equipment for roughly 1/3 the price, and wedge Apple out by producing displays for other customers.

Sharp probably would have been gone by now if it weren't for Apples contributions to the Plant, and maintaining the workforce.

Perhaps Apple should have bought them outright, which was the rumour floating around a while ago.

The equipment is used. Would you buy a car at full retail price even if its only a year old and has 200,000 miles on it?

Hi_XPecTa_Chens said,
The equipment is used. Would you buy a car at full retail price even if its only a year old and has 200,000 miles on it?

Industrial equipment depreciation is much, much smaller than those of commercial vehicles. Awful example.

stevan said,

Industrial equipment depreciation is much, much smaller than those of commercial vehicles. Awful example.

Not according to this - http://www.bea.gov/national/FA2004/Tablecandtext.pdf

Again, I don't understand how you think. The point of my example was simple, no one is going to pay full price for used equipment. PERIOD. It doesn't matter what it is. Again, you seem to THINK Apple is some exception to the rule. I never said manufacturing equipment depreciated at the same rate of a car. The principle is however equally the same. No one is going to pay full price for used equipment. Would you pay full price for a used car?

Also, again you failed because of this fact. Cars parts actually get cheaper over time as long as they are still being produced. With machines, many companies like ones I have worked at; have a machinist on staff to make parts as they tend not to be readily available for very special ones or are needed more often because these are parts that wear fast and thus have to be replaced often. Buying such a part would be pricy vs making it yourself. Also as machines get older, companies that make the machine may no longer stock parts making limited supplies go up in costs, making it cheaper to make them yourself.

Was does the rate of depreciation have to do with that? Nothing.

Also, manufacturing machines have more parts vs a automobile, which means the more they are used the more those parts wear thus making the cost to keep them going more expensive. Which means buying a newer one will be better than an older used one. According to that chart I linked, they depreciate at pretty much the same rate.

Edited by Hi_XPecTa_Chens, Jul 15 2014, 5:44pm :

Hi_XPecTa_Chens said,
Not according to this - http://www.bea.gov/national/FA2004/Tablecandtext.pdf

Again, I don't understand how you think. The point of my example was simple, no one is going to pay full price for used equipment. PERIOD. It doesn't matter what it is. Again, you seem to THINK Apple is some exception to the rule. I never said manufacturing equipment depreciated at the same rate of a car. The principle is however equally the same. No one is going to pay full price for used equipment. Would you pay full price for a used car?

Also, again you failed because of this fact. Cars parts actually get cheaper over time as long as they are still being produced. With machines, many companies like ones I have worked at; have a machinist on staff to make parts as they tend not to be readily available for very special ones or are needed more often because these are parts that wear fast and thus have to be replaced often. Buying such a part would be pricy vs making it yourself. Also as machines get older, companies that make the machine may no longer stock parts making limited supplies go up in costs, making it cheaper to make them yourself.

Was does the rate of depreciation have to do with that? Nothing.

Also, manufacturing machines have more parts vs a automobile, which means the more they are used the more those parts wear thus making the cost to keep them going more expensive and they depreciate just as much. According to that chart I linked, they depreciate at pretty much the same rate.

The chart you just posted proved you wrong. Also, business 101, depreciation is something that a company can write off. You couldn't do the same with a personal car.

Awful comparison.

stevan said,

The chart you just posted proved you wrong. Also, business 101, depreciation is something that a company can write off. You couldn't do the same with a personal car.

Awful comparison.

Since I am an independent contract and most of my use of my car is for work it is a 100% write off. The fact it doesn't apply to everyone doesn't matter.

Dude, just face it it, my argument is better than yours and wins simply because I provide a logic point of reason. To be a fan of any OEM or product is a losing battle out the gate. As long as you are willing to obsess over nothing and negate facts, you will always be wrong.

I've owned 2 businesses in my life. I started off with my own computer store selling and repairing PC's and now I am part owner of a company that does structure cabling and we also repair electronics like tablets and cell phones.

I know exactly what I am talking about when I say Possession is 9/10th of the law.
You need to go an read case law on Possession and see how ownership which does have its privileges and advantages mean absolutely nothing in the end.

Case in point - Go and read the case of Apple vs Microsoft. In that case, Apple argued ownership of many things. Who won in the end? Wasn't Apple was it?

Hi_XPecTa_Chens said,
Since I am an independent contract and most of my use of my car is for work it is a 100% write off. The fact it doesn't apply to everyone doesn't matter.

Dude, just face it it, my argument is better than yours and wins simply because I provide a logic point of reason. To be a fan of any OEM or product is a losing battle out the gate. As long as you are willing to obsess over nothing and negate facts, you will always be wrong.

I've owned 2 businesses in my life. I started off with my own computer store selling and repairing PC's and now I am part owner of a company that does structure cabling and we also repair electronics like tablets and cell phones.

I know exactly what I am talking about when I say Possession is 9/10th of the law.
You need to go an read case law on Possession and see how ownership which does have its privileges and advantages mean absolutely nothing in the end.

Case in point - Go and read the case of Apple vs Microsoft. In that case, Apple argued ownership of many things. Who won in the end? Wasn't Apple was it?

My god I feel sorry for your employees if you think that 9/10th rule is actully a law. Also the Apple vs MS is another god awful comparison. You really can't get a receipt on a patent like you can on industrial equipment. You shouldn't argue things you know nothing about for the sake of argument. Case in point:

Hi_XPecTa_Chens said,
A Fortune 500 company is one that has 500 employees.

Sharp displays are great. Have it on my Meizu. Have and had LG with IPS, HTC with PVA. Those Sharp ASVA are best LCD displays on the market.

Samsung should respond with not selling Apple any more components for their phones. This is just corporate bullying and pressure to make others do what they want. Not a real big fan of Samsung, but this is just ridiculous.

Apple is trying to ween off of samsung already. This is probably *why* they want to put this restriction in place, so that they will have enough displays produced for the iPhone when they finally do cut the cord with Samsung displays.

Also, Samsung refusing to sell to Apple would just hurt them in the end, Apple is a major customer after all.

Whereas, Apple setting this restriction isn't hurting Apple, they don't sell the displays. And it's hardly going to hurt Sharp when Apple has Sharp running at 90% capacity alone. Adding some other players - minus - samsung would still bring them to 100%.

Apple is just looking out for their future best interests. Which is what any company would do in this situation.

Binary said,
Apple is just looking out for their future best interests. Which is what any company would do in this situation.

Funny. Yes, Apple is looking out for "their best interest", only they're making a big mistake thinking their mafia tactics are going to work against the Asians. They'll end up with nothing, eventually, when all the technology progresses way beyond what they can get a hold of. By the time they'll have to ditch the arrogance because of too much dependence on others in order to stay relevant in the field (don't delude yourself, they'll never have any in-house development that can compete), they will have lost way too much money. That's how it goes with douches like Apple - big ego, big losses. Probably nothing they won't be able to deal with, but funny nontheless.

audioman said,

Funny. Yes, Apple is looking out for "their best interest", only they're making a big mistake thinking their mafia tactics are going to work against the Asians. They'll end up with nothing, eventually, when all the technology progresses way beyond what they can get a hold of. By the time they'll have to ditch the arrogance because of too much dependence on others in order to stay relevant in the field (don't delude yourself, they'll never have any in-house development that can compete), they will have lost way too much money. That's how it goes with douches like Apple - big ego, big losses. Probably nothing they won't be able to deal with, but funny nonetheless.

Sorry, which company doesn't have a big ego? They all think that their products are the best, and try to do anything they can to stifle the competition. That's how these things work.

Binary said,

Sorry, which company doesn't have a big ego?


The companies that are run by people who are not motivated by ego and childish crap. Huge and "evil" multi-companies like Samsung, innovative and against the current and monopolies companies like Tesla, sheer power-hungry companies like <insert banking company name>, etc. etc. Companies driven by egos (like Apple) may be successful for a while, but they have no chance.

Binary said,
Apple is trying to ween off of samsung already. This is probably *why* they want to put this restriction in place, so that they will have enough displays produced for the iPhone when they finally do cut the cord with Samsung displays.

Also, Samsung refusing to sell to Apple would just hurt them in the end, Apple is a major customer after all.

Whereas, Apple setting this restriction isn't hurting Apple, they don't sell the displays. And it's hardly going to hurt Sharp when Apple has Sharp running at 90% capacity alone. Adding some other players - minus - samsung would still bring them to 100%.

Apple is just looking out for their future best interests. Which is what any company would do in this situation.

Dude, Samsung as a whole is 10x's the company Apple is. The problem is this fact. Samsung is a conglomerate. Even though it si a large single company it is broken down into groups. Each group musty be able to secure its own business to make money to support itself as the Samsung LTD will not help the smaller groups. Samsung Electronics, yes does make parts for Apple but they don't need Apple. You have your dependencies confused. Apple buys parts, Samsung can make them and sell them.

There is no company on this planet that has the cash or yield capabilities as Samsung, NOT EVEN INTEL.

Yes Samsung makes a lot of money from making stuff from Apple, but no they wont be hurt is they lose them. Apple is already moving as much of the components away from Samsung making them as they can. Apple stands to be the one hurt if the company they choose to replace Samsung with can't product the quality and quantity Samsung can. Facts show so far no one comes even close.

Hi_XPecTa_Chens said,

Dude, Samsung as a whole is 10x's the company Apple is. The problem is this fact. Samsung is a conglomerate. Even though it si a large single company it is broken down into groups. Each group musty be able to secure its own business to make money to support itself as the Samsung LTD will not help the smaller groups. Samsung Electronics, yes does make parts for Apple but they don't need Apple. You have your dependencies confused. Apple buys parts, Samsung can make them and sell them.

There is no company on this planet that has the cash or yield capabilities as Samsung, NOT EVEN INTEL.

Yes Samsung makes a lot of money from making stuff from Apple, but no they wont be hurt is they lose them. Apple is already moving as much of the components away from Samsung making them as they can. Apple stands to be the one hurt if the company they choose to replace Samsung with can't product the quality and quantity Samsung can. Facts show so far no one comes even close.

Funny since Apple still makes more money than the entire Samsung conglomerate.

stevan said,
Funny since Apple still makes more money than the entire Samsung conglomerate.

Funny that you can't differentiate between market share and revenue / profit. Samsung's higher market share and dominance in countless fields means that Samsung is a many times more stable, powerful, influential and market dominating company than Apple which depends on others to manufacture the components it uses and most of, if not all of its product.

audioman said,

Funny that you can't differentiate between market share and revenue / profit. Samsung's higher market share and dominance in countless fields means that Samsung is a many times more stable, powerful, influential and market dominating company than Apple which depends on others to manufacture the components it uses and most of, if not all of its product.

My bad I keep forgetting that in some parallel universe, Apple has been on the decline for years now. And that Samsung owns all of it's factories in China and Taiwan.

stevan said,

My bad I keep forgetting that in some parallel universe, Apple has been on the decline for years now. And that Samsung owns all of it's factories in China and Taiwan.


Your bad, yes, not because of any of the things you just wrote for no sensible reason, but because like I said, you can't differentiate between market share and revenue. Samsung has countless times more market dominance than Apple and always will.

audioman said,

Your bad, yes, not because of any of the things you just wrote for no sensible reason, but because like I said, you can't differentiate between market share and revenue. Samsung has countless times more market dominance than Apple and always will.

And? Apple has a very small market share with PCs yet it has majority of profits. Same goes with tablets and smartphones.

FYI, investors care about profits and profits only. For proof look at Samsung shares in the last few weeks since the announcement of drop in profits...

"And?" And that means Samsung is one of the few companies that actually dictate how the market is going to look and work. The components that countless companies in the entire world use, from the smallest chips to SoC components to panels are made by market dominating and dictating companies like Samsung, LG, Motorola (no, no the so-called "mobile division"), TI and a few others, mainly, and companies like Apple are merely very simple clients of such companies, and are completely at their mercy, as far as access to technology goes. Childish comments in places like this such as "X company should stop doing business with company Y!" are made by utterly clueless people who live in their own Utopic reality completely unaware of how things actually work.

You say investors "care about profits and profits only", yet you just don't know how investments work at all, and you have no idea where "profits" actually come from, nor what the many considerations regarding the market fluctuations, stability, long and short-term viability, etc. are. Big investors in companies like Samsung are fundamentally different than investors in companies like Apple, and it doesn't even make sense to even try to sum it up. You seem to be submerged in oversimplified outlooks that have no relation to reality, thinking a company like Apple, with its high profits, is even comparable to a market dominating and dictating huge conglomerate such as Samsung. Measuring actual profits in a market dominated by a few companies is impossible by looking just at individual companies' revenues, because the actual (not the so-called "net profit" limited to a single company itself) get spread and divided in many ways and as a (serious, not small time) investor in such companies, your own profits never depend on a single company's stated net worth.

stevan said,

Funny since Apple still makes more money than the entire Samsung conglomerate.

Typical fanboi argument. When all else fails mention how much money Apple makes.

It doesn't matter dude. We aren't talking about money. We are talking quality and quantity.

Once Samsung isn't fabricating chips for the iPhone anymore, we see how much more crappy Apple's devices get.

There are things more important than money. Since Samsung doesn't have all its egg tied into one basket, when the smartphone craze ends, who is going to be left in the cold trying to come up with some new gimmick to keep money coming in? It won't be Samsung.

stevan said,

And? Apple has a very small market share with PCs yet it has majority of profits. Same goes with tablets and smartphones.

FYI, investors care about profits and profits only. For proof look at Samsung shares in the last few weeks since the announcement of drop in profits...

Yes, its easy to have higher profist when you sell a product for 3 times it actual value to fool.

Need an example? DO we really need to go down this road? X86 hardware is cheap due to the fact there are multiple OEM's selling the same stuff. A $1500 Mac is nothing more than a $1000 computer from every other OEM.

Apple doesn't make more moey selling Mac vs OEM's like HP they simply don't. The Mac is less than 20% of Apple's revenue. If they didn't have the iPad or iPhone, he Mac sales would not be able to carry a company the size of Apple.

Just do the math. If Apple sells 2.5M Mac's at $1500 That isn't even enough money to pay for much of the production, no less paying employees and taxes.

The reason Apple makes more profit on PC sales is because they have a smaller distribution channel for example. They only sell PC's at Apple's store and most Best Buy. While PC OEM's sell a computer through every major retailer. Apple's profits comes mostly from the fact they spend far less money on distribution, also because they don't make a darn thing. It is cheap to pay someone $1 to build your devices vs making it yourself for $200. Again this is a price savings leading to more profits.

Again it is said that when people are 100% right, your only argument is Apple's profits. It doesn't matter. Has APple profits landed you top performing device at a lower cost? NO. That mac is still overpriced, still overheats and is overrated.

The iPhone and iPad have not changed much since the very first model. In fact they are impossible to tell apart from a distance of more than 2FT.

While other OE's actually spend money to offer variety and choice options other than Black and White.

You need to wake up dude.

I don't blame Apple. They helped sharp out of a rough patch, and now depend on sharp as a key supplier. What if sharp decides to contract with another large company, and doesn't have the resources to produce the numbers apple needs? Apple would be screwed, or basically blackmailed into paying a higher price to guarantee production capacity.

If you ask me Sharp are being the douches.

Steven P. said,
With that logic, Apple should be rewarding customers for making them relevant again then?

Eh? It's not about rewards.

How's the old saying go? Don't bite the hand that feeds you....

Steven P. said,
With that logic, Apple should be rewarding customers for making them relevant again then?

But by their Arrogance, you are rewarded with the amazing magical hardware they produce for you... right? *LOL*

Binary said,
I don't blame Apple. They helped sharp out of a rough patch, and now depend on sharp as a key supplier. What if sharp decides to contract with another large company, and doesn't have the resources to produce the numbers apple needs? Apple would be screwed, or basically blackmailed into paying a higher price to guarantee production capacity.

If you ask me Sharp are being the douches.

False. When a manufacturer signs a contract to yield a certain amount of product, they are bound by it.

Even if Sharp took on another PEM like Samsung to make components, in this case displays, they still can't offer more than they can actually make happen. The fact is, Apple doesn't want sharp to offer its services to anyone else especially if that someone else is Samsung.

Samsung doesn't need sharp to make displays anyways as they typical make their own. However, since Samsung mostly uses OLED displays, taking all their own factories and making just those and have someone else make the few LCD's they need is a huge deal.

Also Samsung likely no longer makes displays for Apple as these typically come from Sharp or LG.

Even if Apple bought Sharp in some form, trying to prevent them from offering services out to others to make more money is wrong and has to be against Anti-trust laws somewhere.

I see one thing happening, Sharp will squeeze Apple for more money to stay exclusive or Sharp will seek action through its own Government. Apple is a US company and another country can do whatever it likes.

Let them have it, they'll (Apple) will only drag it through the courts and win anyway. One day playing the "douche" card will cost them big time, what comes around goes around as they say ;)

FloatingFatMan said,
...This isn't a court case...
He said Appple will drag it in the courts...he didn't say they were in court. He is right anyways.

If I was Sharp I have a better idea. Since Apple bought it, Sharp just take their employees and whatever Apple doesn't own and walk out the door and let Apple fend for themselves.

FloatingFatMan said,
"Drag it in the courts", yes. Which presumes it's IN the courts already. It's not, so they'd first have to "drag it in TO the courts".

He won't get it....

I don't get it. Apple has Samsung stuff in their hardware. They also have Sharp stuff. Samsung makes most of its hardware but does buy some stuff for some devices from elswhere, including SoCs for certain markets. Apple only wants Sharp not to make displays for certain Samsung devices and markets, or at least that's what it will end up being.

Either Apple has invested in those Sharp facilities and doesn't want competitors to benefit from it (odd thing since i bet they benefit from competitor's investments in facilities like these) or they are just a bunch of douches.

It's funny because Samsung also supplies components for Apple's iDevices as well (also one of the reasons Samsung got sued for design similarities).

Steven P. said,
It's funny because Samsung also supplies components for Apple's iDevices as well (also one of the reasons Samsung got sued for design similarities).
The fact they supplied them with parts doesn't mean anything. Samsung has the money and technology to simply buy a device take it apart and see how it is made and copy it. Making a device to a spec for another OEM, doesn't mean they copied anything. Samsung makes better displays than Apple, especially since Apple doesn't';t make displays; they simply buy them.

How can you copy someone who doesn't even own a frikkin thing?

audioman said,
Of course they can. And that's good, because it means those douches won't last long in that field.

Douche? Do you mean Sharp or Apple?.