Tech

Sharp Struggles With iPhone Part

The Wall Street Journal Online ,

Juro Osawa,
31 August 2012 17:40,
607 words,
English,
WSJO,
Copyright 2012 Dow Jones & Company, Inc. All Rights Reserved.

Japan's Sharp Corp (javascript:void(0);). hasn't started mass producing screens for Apple Inc (javascript:void(0);).'s next iPhone, people with knowledge of the situation
said Friday, raising questions about whether the U.S. company will have enough components to meet demand for the new smartphone.

Sharp, a major supplier of liquid crystal displays to Apple (javascript:void(0);), had planned to start shipping iPhone screens by the end of August, the people said, but
mass production has been delayed in part by manufacturing difficulties. It remains unclear when the company can start shipping the LCD panels, one of the people said.

Sharp is one of three suppliers of LCD panels for the next iPhone. The other two suppliers—Japan Display Inc. and South Korea's LG Display Co (javascript:void(0);).—
have already started shipping the screens to Apple (javascript:void(0);), according to other people familiar with the situation.

Earlier this year, Sharp also delayed shipments of screens for Apple (javascript:void(0);)'s latest iPad, but there were no apparent supply shortages of the tablet
computers.

Carolyn Wu (javascript:void(0);), a Beijing-based spokeswoman for Apple, declined to comment. Apple (javascript:void(0);) is expected to hold an event on Sept. 12 to
discuss new products, according to a person familiar with the matter.

Apple (javascript:void(0);)'s chief rival, Samsung Electronics Co (javascript:void(0);)., unveiled a number of new products Thursday at a trade show in Berlin. Meanwhile,
the two companies, which command about 50% of the global smartphone market, are locked in a legal battle over patents for their mobile devices. Last week, a U.S.
federal court jury awarded Apple (javascript:void(0);) $1.05 billion in damages for its patent infringement claims against Samsung (javascript:void(0);).

In July, people familiar with the situation said the next iPhone will use in-cell LCD panels, a new technology that makes the smartphone's screen thinner by integrating
touch sensors into the LCD, eliminating the need for a separate touch-screen layer. But the people said in-cell panels are more difficult to mass produce compared with
conventional LCD panels.

LG Display Chief Executive Han Sang-beom said last week the company had begun mass producing in-cell LCD panels.

The delay at Sharp comes as the Japanese electronics maker, which also makes televisions and solar panels, is facing a cash crunch and looming debt-repayment
deadlines. While sitting on more than $15 billion in interest-bearing debt, Sharp has forecast a net loss of ¥250 billion yen ($3.18 billion) for this fiscal year through
March, as its core businesses remain unprofitable.

On Friday, Sharp's shares fell 13% to ¥198 amid concerns over a planned investment from Hon Hai Precision Industry Co (javascript:void(0);).

Hon Hai, also known as Foxconn (javascript:void(0);), agreed in March to take a 9.9% stake in the troubled Japanese company, but Sharp's stock has fallen steeply
since then, prompting the Taiwanese firm to renegotiate the terms of the deal. Hon Hai Chairman Terry Gou (javascript:void(0);) was in Japan this week, but the two
companies weren't able to reach an agreement.

Standard & Poor's (javascript:void(0);) Ratings Services also cut Sharp's credit rating to junk status, marking the first downgrade of the company's debt to a
noninvestment grade by a major ratings company.

Jung-Ah Lee in Seoul contributed to this article.

Corrections & Amplifications The Wall Street Journal reported in late July, citing a personal familiar with the matter, that Apple (javascript:void(0);) is expected to hold an
event on Sept. 12 to discuss new products. An earlier version of this article reported that Apple (javascript:void(0);) has said it plans to unveil a new product at a Sept. 12
event.

Write to Juro Osawa at juro.osawa@dowjones.com (javascript:void(0))

Dow Jones & Company, Inc.

Document WSJO000020120831e88v00209

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