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On May 12, Sharp announced its medium-term management plan, which aims to chart the companyâs financial course until the fiscal year ending in March 2028. While the company envisions a significant restructuring of its operations, especially in the LCD panel business, the path to profitability remains long and uncertain. The company revealed that it anticipates continued losses in the LCD panel sector through the fiscal year 2026. This forecast indicates that Sharpâs efforts to turn its LCD business around are not expected to bear fruit in the immediate term, signaling a tough road ahead.
Company Overview
Sharp, known for its dual focus on LCD panels and branded products such as home appliances, presented its financial outlook alongside a revamped corporate strategy. The company plans to scale back its LCD panel operations, including the sale of certain factories to Foxconn (also known as Hon Hai Precision Industry). However, the company expects these steps to only slowly improve its financial position, projecting that the company will still be in the red by March 2026.
Key Aspects of the Medium-Term Management Plan
Sharpâs new medium-term plan outlines ambitious goals, including a threefold increase in consolidated operating profit by the fiscal year 2025, aiming for 80 billion usd. While the company has long struggled to revive its LCD panel business, it is now focusing on the potential of its branded consumer products, especially those integrating artificial intelligence (AI). With a renewed focus on AI-powered appliances and overseas manufacturing investments, Sharp hopes to offset the continuing struggles in the LCD sector.
LCD Panel Business Challenges
The companyâs LCD panel division continues to face significant hurdles. Sharp is reducing its LCD production capacity by closing or selling off underperforming factories, such as the second plant in Kameyama, Mie Prefecture, which will be sold to Foxconn by August 2026. Similarly, Sharp will cease production at its Mie Prefecture-based facility by the end of FY2027, retaining only prototype production lines. The company is also consolidating production at its Kameyama and Hakusan factories, which will shift to producing smaller panels for specific applications such as automotive displays and virtual reality (VR) goggles.
The decline of Sharpâs LCD business can be attributed to two major factors: competition in the large-panel segment, where South Korean and Chinese manufacturers have intensified price wars, and the companyâs slow adoption of new technologies like OLED, which has further hampered its market position.
Financial Forecast
Sharpâs forecast for fiscal year 2026 reveals an ongoing struggle to achieve profitability in its LCD segment. Despite expecting its LCD business to break even by March 2027, the company predicts continued losses for the fiscal year 2026, with a projected operating loss of 405 billion usd. On a more positive note, Sharp has managed to secure a profit for fiscal year 2025, forecasting a 360 billion usd profit after a significant asset sale, including the sale of part of its Sakai factory.
For fiscal year 2026, the company expects a 14% decrease in revenue to 1.85 trillion usd and a 72% drop in net profit to 10 billion usd. Despite these expected losses, Sharpâs long-term recovery plan has an optimistic outlook, with the company anticipating operating profits of 5.5 billion usd by March 2028, though at a low operating profit margin of just 1.8%.
What Undercode Says:
The challenges faced by Sharp are indicative of broader trends within the electronics industry, where companies with once-strong positions are struggling to maintain their market share. Sharpâs decision to pivot away from large-scale LCD production and focus on niche markets such as automotive displays and VR panels is a sign of the times, where diversification and technological innovation are increasingly vital to survival.
The shift toward artificial intelligence (AI)-enabled products also aligns with global trends where AI has emerged as a central theme in consumer electronics. While the integration of AI into home appliances can offer some differentiation in a competitive market, it remains to be seen whether Sharp can effectively leverage this technology to reverse the decline in its branded business.
Moreover, Sharpâs continued reliance on asset sales, such as the Sakai factory, to maintain profitability highlights the companyâs fragile financial position. This could be a temporary lifeline, but without a sustainable, profitable core business, Sharp may find itself in a cycle of reactive restructuring rather than proactive innovation.
Sharpâs prospects in the LCD market seem grim in the short term. However, the strategic divestments and increased focus on higher-margin products could eventually lead to a more stable business model. In any case, Sharpâs ability to recover hinges on its capacity to navigate the challenges posed by technological change and global competition.
Fact Checker Results:
- Sharpâs LCD panel business continues to struggle due to fierce competition and technological delays, as mentioned in the article.
- The companyâs strategy to scale back LCD operations and refocus on branded AI products aligns with the current market trends in electronics.
- The financial forecasts reflect a challenging year ahead, with continued losses expected in the LCD segment for FY2026.
Prediction:
Sharpâs efforts to revitalize its LCD business are unlikely to succeed in the near term. The company’s shift toward more specialized markets such as automotive displays and VR panels may provide some relief, but the broader LCD business is expected to remain a significant drain on its resources. Furthermore, while AI-powered consumer electronics represent a growth area, Sharpâs overall recovery will depend on its ability to effectively integrate this technology and capitalize on emerging consumer trends. If these efforts do not gain traction, Sharp may continue to face significant financial pressures in the coming years.
References:
Reported By: xtechnikkeicom_e497f936c4ae36448b2a7d5f
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