Among Sharp’s offerings, the LTPS panel technology is the most important prize for Foxconn. One of the chief reasons behind Foxconn’s repeated and aggressive overtures to Sharp was the Japanese panel maker’s contribution to the small-size panel application.

WitsView’s analysis has ranked Sharp as one of the top three LTPS panel suppliers worldwide in 2015, accounting for about 18% of the global capacity. This alliance therefore will immediately give a big boost to Foxconn’s small-size panel capacity. Sharp’s expertise will also reduce Foxconn’s learning curve on planning and building fabs for LTPS products later on.

In addition to being a very competitive contract manufacturer in terms of scale, Foxconn can now press home its vertical integration advantage by producing panels internally for high-end, mid-range and low-range smartphones.

Besides strengthening Foxconn’s relations with the U.S. clients, this alliance will be instrumental in capturing other customers. Other contract manufacturers may eventually fall further behind in the competition as they unable to reach the same level of integration as the leading Taiwanese electronics maker.

Sharp can also extend Foxconn’s ability to supply for mid-size applications, particularly related to products with IGZO thin-film transistor. Sharp has over five years of experience developing IGZO thin-film transistor and is the first panel maker to mass produce IGZO panels for various devices.

Foxconn sees this technology as being highly complementary as the Taiwanese electronics assembler lacks related expertise. WitsView anticipates that Foxconn in time will bring together Sharp’s IGZO panels and integrated touch solutions provided by its other subsidiary GIS under one mega production site.

The Sharp deal also has a huge implication in the large-size panel market. Foxconn is expected to have greater influence over Sharp’s Gen-10 fab in Sakai, Japan. Taking into account that Foxconn is also a majority shareholder of Innolux, the Taiwanese electronics giant will indirectly control an equivalent of 20% of the world’s large-size panel capacity after the completion of the acquisition.

As for the future of Sharp-branded TVs, WitsView believes Foxconn will not pursue courses that could provoke conflicts of interests with its clients based on the company’s track record. There have also been signs that the Sharp brand is gradually losing its influence. Hence, the benefits that Foxconn get from Sharp’s large-size panel manufacturing and TV business will not be as notable as the benefits for the mid- and small-size panel applications.

With regards to reports of Foxconn using Sharp to enter the OLED market, WitsView finds that this speculation should be treated with some caution. While the acquisition will bring in new capital that could be used for a joint OLED venture, Sharp may not be ready in terms of technological and manufacturing capabilities. The Japanese maker for instance has yet to mass produce OLED panels.

From a corporate culture perspective, Foxconn’s strength lies in the integration of matured technologies rather than the deployment of new and untested technologies. The prospect of a Taiwanese-Japanese alliance to invest in OLED manufacturing is there, but such venture would probably not reach economies of scale in the short term. Overall, the possibility that a restructured Sharp could soon become a major OLED panel supplier is somewhat remote.