The 10th generation panel factory invested by Terry Gou has become a burden

In 2018, Sharp's Osaka 10th Generation Line (SDP), which was invested by Hon Hai Chairman Terry Gou in 2012, reported a net loss of 28.4 billion yen (same unit below) after tax, the second loss in three years after 2016. As more and more panel factories are being built, especially large-size panel production capacity in mainland China, the outside world is watching closely whether the 10th Generation Line, which Terry Gou was proud of, will become another drag.

Sharp's own-brand TVs returned to the mainland market in 2017, with good initial sales performance. According to the "2017 China TV Consumption and 2018 Trend Forecast Report," Sharp's global TV sales in 2017 exceeded 14 million units, of which more than 10 million were sold in the mainland.

It is worth noting that in 2017, Sharp's TV sales almost always ranked first in the industry during several major shopping festivals in mainland China, including 618, 818, the National Day holiday, Double 11, and Double 12. Sharp's performance was quite impressive.

However, the local TV brands in China are not easy to deal with. Sharp also admitted that "the competition is really fierce. Local brands still have their advantages. In addition, they have a deep and wide layout, so it is not so easy to surpass them."

Analyzing Sharp's 10th generation line (SDP) after Terry Gou took over, if we look at it from an annual perspective, including 2013 to 2015, and 2017, there were four years of profit, which seems to be good, because there were only three years of losses, namely 2012, 2016 and 2018. However, if you look at the actual numbers, it is different.

In the four profitable years of Osaka 10th Generation Line (SDP), the highest profit was in 2014, with a full-year profit of 7.2 billion yen, followed by 2013, with a profit of 6 billion yen. The profit figures in 2015 and 2017 were similar, both 4.3 billion yen, which can basically be said to be just a small story.

As for the three years in which SDP suffered losses, the smallest loss was in 2012, with a loss of 7.4 billion yen, but the loss in 2018 reached 24.8 billion yen, and in 2016 it was a huge loss of 59.2 billion yen. The total loss over the past seven years was 69.6 billion yen, which is really embarrassing for Terry Gou.

It is worth noting that in 2017, SDP refused to ship products to Samsung on the grounds that Samsung did not accept the price increase. Now, SDP's financial report is full of red again. SDP, which was once regarded by the outside world as the management performance of Terry Gou, has to face an industry where panel prices are prone to fall but difficult to rise, on the one hand, and more and more competitors on the other. How to get out of this quagmire is probably a question that Terry Gou and Sharp have to think carefully about.