Fast-growing wireless chip maker Qualcomm is set to move into the LCD screen market with a $120 million investment in struggling Sharp.
The Japanese manufacturer announced that it had reached an agreement with Qualcomm subsidiary Pixtronix to develop indium gallium zinc oxide (IGZO) displays following the investment.The deal will benefit Qualcomm by improving the display technology, enabling the production of lower powered displays targeted at mobile devices.
The deal will see also see Sharp accelerate its strategy for growth in small to medium sized LCD display sales, the firm said in a statement.
Sharp has been in major difficulties over continued losses due to TV sales slowing and other factors, such as the strong yen. But it has managed to woo the San Diego firm with the prospect of developing the display technology. The two will also use the investment to commercialise MEMS, integrating Sharp's IGZO technology.
Sharp is in desperate need of investment. Its credit rating was recently downgraded to junk status, and executives have reportedly been in talks with Intel and Dell to inject some cash into the firm - which threatens to post yet more record losses.
Qualcomm is the largest producer of wireless chips for smartphones, and also produces ARM based processors. It, by contrast, is doing very well for itself.
The company is set to see 27.2 percent in semiconductor revenue during 2012, despite the market as a whole falling 2.3 percent, according to analysts at IHS iSuppli.
According to the report, Qualcomm has leapfrogged Texas Instruments, becoming the third placed chip firm worldwide. TI has struggled in the wireless market and recently announced that it would be exiting the business to concentrate on system on chip products.
Qualcomm has performed well in tough economic conditions largely due to the sustained growth in smartphone sales. The company is predicting 10 percent compound annual growth over the next five years, with plenty of room to increase revenues as smartphone penetration across emerging markets continues.
Qualcomm's fourth quarter results saw revenues increase 18 percent compared to the same time last year, up from $4.12 billion to $4.87 billion.