Apple's primary manufacturer Foxconn has reached an agreement to purchase troubled Japanese electronics maker Sharp for a revised 389 billion Japanese yen, or roughly $3.5 billion, according to The Wall Street Journal.
The two companies had originally settled on an estimated $6.2 billion takeover last month, but Foxconn put the deal on hold after discovering that Sharp had hundreds of billion of yen in "previously undisclosed liabilities."
The deal, which is expected to be finalized on Saturday, should strengthen Foxconn's position as both an electronics maker and assembler. Sharp has been one of Apple's main LCD display suppliers for iPhones and iPads in recent years.
Foxconn has long been interested in producing displays, which are typically one of the most expensive components in iOS devices. The supplier entered into a strategic partnership with Sharp in 2012, but the deal was ultimately unsuccessful.
Apple could soon be shifting away from LCD displays, however, as recent rumors claim it plans to release at least one OLED-based iPhone as early as 2017, with display panels sourced from some combination of Japan Display, LG, and/or Samsung.
Top Rated Comments
FoxConn: How much of a good idea
Apple: Maybe an x% extra per unit good
Apple's procurement folks will look to other suppliers to provide bigger price cuts to cover any increase. They may not get all of the price cuts they are looking for, but they'll probably get most of it. The procurement folks refer to this as 'productivity' increases that any 'good partner' would be glad to provide, in exchange for an enhanced relationship and continuing orders etc etc blah blah. It's standard stuff in the procurement world, and I can't imagine the Apple folks do anything different in this respect.
Procurement folks aren't (all) bad people(!) - look at work by Kraljic to understand the balancing act good procurement folks have to get right. To understand what nasty procurement practices look like, research 'PICOS' and aggressive supply chain management - it's quite an eye opener!