Asia’s new electronic giants

2012 has become the year of mega deals between Asia’s consumer electronics manufacturers. Since February four electronic giants have emerged as various consumer electronics manufacturers have joined together to remain competitive in the massively changing market. In recent years this market has experienced a sharp and dramatic swing in demand away from PC’s and televisions towards tablets and smartphones, which has happened so quickly that many established manufacturers are struggling for survival.

The first of these deals happened in February when Renesas Electronics, Fujitsu and Panasonic announced that they were integrating to form a joint venture that would produce all their system chips. This was followed in March when Foxconn announced that it was investing $1.6bn to acquire a 9.9% stake in Sharp and a 47% stake in Sharp Display Products in order for the two corporations to make display products together. More recently Samsung announced that it was building a $7bn memory chip factory in China and launching a new affiliate called Samsung Display using Samsungs display technology and Sony’s LCD technology that it had acquired for $939m last December. In response to these deals the Japanese firms of Sony, Toshiba, Hitachi LCD announced that they are merging their LCD operations using $2.6 billion of government-backed funds. All of which makes for heady days in consumer electronics.

At the heart of these deals is Apple and OLED, the latest technology to emerge for display devices. Apple is currently using LCD displays in all its devices and is looking for a new supplier to provide it with OLED, regarded as the latest technological development in flat screens. As Apple is also looking to launch its new Apple Television and is currently the largest consumer electronic brand with 57% of the global tablet market and 40% of the global smartphone market; whoever secures the deal would be set to dominate at the expense of its main rivals. This decision is especially crucial for Samsung, as Apple is already their biggest customer, buying $7.8 billion of components such as memory chips and LCDs in 2011 and expected to buy around $11 billion in 2012.

Before these deals it was well known that Apple was looking for a company that could both produce the volumes it requires at a speed to suit its demand and at a quality to meet its standard. While Samsung would appear to be in the driving seat, it’s not certain who will emerge victorious. Samsungs new factory in China will help them be more productive as it will take out extra layers of transport and storage and ensure speedier deliveries but there are question marks over its OLED technology, which has already been rejected by Apple as having “technological problems.’’ The Japanese firms, who have the edge in patents and key technology, are believed to possess OLED to Apple’s standard but not the production facilities.

Time will tell who will prevail but from my perspective I believe that the Foxconn-Sharp alliance is the most likely. Its combination of the efficient production capabilities of Foxconn together with the technological excellence of Sharp looks like the most balanced operation and could be set to become the most dominant in the consumer electronics market.

Abhir Dayaram


  1. Peter McElwee April 5, 2012

    All these deals are great for the likes of Apple and Amazon as they will get their tablets at much cheaper prices which ultimately will boast their net income.

  2. anon527 April 10, 2012

    It’s a shame that so many established electronics firms are now in this position, but that’s progress for you. Sony is due to cut at least 10,000 jobs this week, maybe other Asian firms will follow suit.

  3. Neil Donovan April 10, 2012

    It also might ultimately help Apple achieve its much talked about $1,000 share price

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