Commentary: Will Terry Gou consider acquiring Vizio?

China-based LeEco claims it has been forced to abandon its planned US$2 billion acquisition of Vizio, the second largest US-based TV vendor, because of regulatory issues. Vizion will probably look for a new buyer, but who would that be? Foxconn, perhaps?

LeEco, the holding group for businesses controlled by China-based tycoon Jia Yueting that span cable TV networks, TVs, smartphones and electric cars, announced the Vizio acquisition deal in July 2016. The deal was intended to promote LeEco’s TV hardware and content services in the US, utilizing Vizio’s sales channels.

Like LeEco, Foxconn also has strong intention of stepping into the US TV market. Foxconn reportedly had made an acquisition offer to Vizio previously, but the two sides had failed to reach an agreement apparently on price.

And neither has Foxconn been able to leverage the Sharp brand in the US even though it now controls the Japanese vendor.

Foxconn has been keen on promoting Sharp’s TVs, electronics products and other household electrical appliances since it took up a 66% in the Japan-based electronics giant in April 2016. Under Foxconn’s management, Sharp has raised its 2017 shipment target for TVs to 10 million units, from six million it planned previously.

To solidify Sharp’s marketing power, Foxconn also tried to repurchase the license for selling Sharp-branded TVs in the US from China-based TV vendor Hisense in late 2016. Hisense paid Sharp US$23.7 million in 2015 to acquire Sharp’s TV production facility in Mexico and the right to use the Sharp brand in the North and South American markets, with the exception of Brazil, for five years.

However, Hisense declined to terminate its licensing of the Sharp brand as requested by Foxconn, stating that Sharp has been operating well in the US market under its management.

To demonstrate his seriousness about the US market, Foxconn chairman Terry Gou responded by having Sakai Display Products (SDP), a Sharp affiliate controlled by Gou and his family members, gradually stop supplying TV panels to Hisense. The China-based TV maker, which shipped over 14 million TVs in 2016, and currently ranks as a top-five vendor globally, purchases about two million LCD panels from SDP a year.

Taking up control of Vizio – which ships about eight million TVs a year – would significantly expand Foxconn’s LCD TV business. Combining the volume from Sharp, Vizio and Foxconn (10 million units of OEM models), the Foxconn Group could become the second largest TV supplier globally with shipments totaling around 28 milliion units a year, enhancing its influence in the global TV industry.

Gou said earlier that Foxconn is planning to build a display plant in the US, and therefore a possible acquisition of Vizio and consequently a successful operatin of the brand may eventually help Gou fulfill his goal.

Categories: Display panel Display system Displays

Tags: Commentary Hisense LeEco Sharp Terry Guo US market

Topics: Foxconn-Sharp partnership

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