April 23, 2024

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[THE INVESTOR] Samsung Electronics is seeking US$492 million in arbitration from Sharp and two other Japanese suppliers for suddenly stopping their supplies of liquid-crystal display panels for its upcoming TV sets.

In the suit, filed with the International Court of Arbitration of the International Chamber of Commerce on Dec. 22, Samsung demanded the companies continue supplying panels or pay damages. 

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In September 2016, Sharp signed a deal to supply 6 million LCD panels to Samsung from 2017. As its display-making unit Samsung Display was beefing up organic light-emitting diode panels, Samsung increased orders from Sharp that usually supplies an annual 5 million 40- and 60-inch panels, about 10 percent of its total TV production at about 50 million units.

But Sharp, now owned by Taiwan’s Hon Hai Group, more widely known as Foxconn, notified its supply halt to Samsung with a short notice in November.

Sharp has also notified its supply halt to other TV makers, including LG Electronics, China’s Hisense and Japan’s Sony. Sources said these companies are also likely to seek compensation from Sharp.

Following the breakup with Sharp, Samsung is banking on supplies from its crosstown rival LG Display, Taiwan’s AUO and China’s BOE.

Samsung Display, which is beefing up LCD production for its sister firm, is said to have reduced supplies to Sony.

“Samsung can reduce time and costs through the ICC’s arbitration rather than filing suits,” said an industry source. “More importantly, heightened security is guaranteed.”

Considering a 40-inch LCD panel is traded at about US$120, sources said, the amount claimed by Samsung is estimated to be almost 70 percent of the total deal price.

Samsung and the ICC declined to comment on the suit.

Samsung and Sharp’s LCD partnership dates back to 2013 when the Korean tech giant purchased a 2.1 percent stake in the Japanese partner for 122.5 billion won (US$105 million).

Samsung sought to acquire the LCD business unit of then cash-strapped Sharp in the following years. But Sharp wanted to sell the entire company and Foxconn acquired it early last year for a whopping US$3.8 billion.

After Foxconn’s acquisition, Samsung sold off its stake in September, securing cash worth about 50 billion won based on Sharp’s stock prices. The company suffered 77.9 billion won loss from the stock ownership.

By Lee Ji-yoon (jylee@heraldcorp.com)