​Sharp (6753.JP), once the shing star of Japan’s LCD TV display panel business is selling its Kameyama #2 LCD fab to its parent Foxconn (2354.TT).  The fab, which originally produced TV panels, has been producing small displays for laptops, tablets, and smartphones of late.  Foxconn has not indicated what they will do with the plant when the deal closes (expected by August 2026), but in the interim the fab will continue to operate under Sharp’s control.  Given that Foxconn is Sharp’s largest shareholder, this might be a case where the sale is being made to dress up Sharp’s profitability, with the losses from the fab easier to absorb at Foxconn.
When the sale is completed, Sharp will have two remaining Gen 6 fabs (Hakusan and Kameyama #1) and one Gen 4.5 fab (Mie #3).  The Mie #3 fab has been running at ~50% of its stated capacity, with Sharp expecting to more than double display revenue from that fab by fiscal 2026.  While it is difficult to pin down, given the rapidly changing CE market, we expect much of Sharp’s remaining LCD capacity will be oriented toward the automotive display and XR display markets, with larger panels being produced at Kameyama #1.  Sharp is targeting an increase in the production of panels over 13” at Kameyama #1 from ~30% now to 55% by fiscal 2027.
It would seem that with the sale of Kameyama #2, Sharp has trimmed its display business down to a more manageable level, although relying on continued growth  in automotive displays.  As Sharp is considered one of the most recognizable brands in the CE space, they continue to produce their own TV set branded product, which they can still produce, after the sale, maintaining in-house display production.  Unfortunately Sharp does not produce OLED displays commercially, so we expect Sharp’s OLED TV models are based on LG Display’s (LPL) WOLED panels not on Sharp’s own OLED production.  Hopefully a smaller, more profitable Sharp will be the result of the Kameyama #2 sale…

Back in January we noted that President Trump announced , on his first day in office, the Stargate Project, a $500 billion dollar project to build 500,000 ft2 data centers across the US.  The President outlined ‘Big beautiful buildings’ that would create over 100,000 jobs in partnership with Japan’s Softbank (9434.JP), Open AI (pvt) and Oracle (ORCL), the first of which actually started construction in mid-2024.   The initial $100 billion was said to be deployed ‘…very, very quickly’.   As the President’s speech warmed up, he noted that on the first day of his presidency his administration had already lined up $3 trillion in new US investments and expected to have a total of $6 - $7 trillion by the end of the first week.
The Stargate project, which bears an eerie resemblance (see our note “Stargate – Different This Time?”) to the Foxconn (2354.TT) ‘6th Wonder of the World’ display project in Wisconsin that the President touted during his first term, a project that is still looking for a purpose and has barely produced anything, although much of the Stargate Project is to be funded by private funds, rather than the public funds used for the Wisconsin project. Softbank is expected to directly fund 10% to 20% of the project with capital from its Vision Fund, with the rest of the capital coming from debt.
While Softbank met with a number of banks and PE firms in January. Those negotiations did not prove meaningful, and it seems that Softbank’s team of 20 to 30 has yet to complete the project financial plan and is now working on  smaller project by project financing.  In the interim a number of changes have occurred that are making it difficult to find investors willing to fund such a project.  Those changes are:

• China shocked the world with DeepSeek (pvt), a model that promises a much lower cost of training.
• Trump’s own tariffs are estimated to potentially add between 5% and 15% to the cost of data center construction.
• Fears of industry overcapacity as Microsoft (MSFT) cut back its data center plans and Amazon Cloud Services (AMZN) saw slower than expected growth.

These issues have caused investors to become far more cautious than in 2024 and many are waiting to see how the trade situation plays out before making any large scale investments in the data center market.  This leaves Softbank with less of a story to tell investors and a potentially more difficult task to explain how the project will maintain a high utilization level, necessary for the return that Softbank expects. 
While none of this is really surprising given the fact that the current administration is big on promises and light on details, it would mark another time when US politics overpromised and underdelivered.  We expect more building will be built in Abilene (They were being built even before Project Stargate) but ‘very, very quickly’ already seems to be fading away.  It’s a good thing that the public has a short attention span for such things or they might notice a pattern.

In 2017 Foxconn (2354.TT) announced that it was thinking about coming to Wisconsin, and, as all good politicians do, local bureaucrats quickly cobbled together a $2.85b tax credit plan to help convince Foxconn to choose their site in the tiny (27,732 in 2020) village of Mt. Pleasant for the $10b Gen 10 LCD fab that Foxconn was going to build, along with ‘thousands of jobs to the state’ as per the company.  The deal, which had tax incentives that were 10 times larger than any deal ever made in Wisconsin with a foreign entity was approved by Foxconn in 2018.  Houses were purchased under the threat of eminent domain and razed, and then President Trump, along with Terry Gou, chairman of Foxconn and the governor of Wisconsin, broke ground at the 1,200-acre site on a sunny day in June, promising at least 13,000 jobs.

However, as has been the case with a number of Foxconn projects, things got off to a slow start, although local government spending on roads and infrastructure continued, and Foxconn did not meet qualifications for subsidies in 2018, falling short of the target of 260 hires for the year by 104.  Foxconn decided to change its plans in early 2019, then promising a Gen 6 LCD fab, due to ‘market conditions’ and by 2021, with little project development, a new administration signed a ‘modified’ agreement with Foxconn that reduced the number of jobs created by the project from 13,000 (“…probably 50,00 or more…” – Donald J. Trump) to 1,454, reduced the tax credits to $80m (paid by taxpayers) if conditions were met, and lowered Foxconn’s capital commitment from $10b to $672m (by 2026), while giving Foxconn the option to produce items other than LCD displays at the site.
Over the years since the original plan was formulated a number of buildings have been erected on the site (Figure 2); a guardhouse, a 120k ft2 storage facility, a 1m ft2 factory, and a dome.  During the pandemic the manufacturing center was used to produce respirators, face masks, and coffee kiosks, and more recently servers.  No displays were ever built on the site, but Foxconn began leasing about 1/3 of the site to Microsoft (MSFT) for $50m in 2023.  Microsoft is building a $1b data center on the site that is thought to eventually employ between 300 and 400 people.  Phase 1 of the Microsoft project must begin by July 2026 and phase 2 by July 2033 to qualify for tax breaks. 
All in, promises were made by Foxconn, the Governor of Wisconsin, and President Trump that the Foxconn project would be “…the Eighth Wonder of the World”, bringing jobs and prosperity to the region.  In this case taxpayers footed much of the bill for infrastructure, but few realize that the person who introduced the Chairman of Foxconn to President Trump which began this sad tale, was none other than Masayoshi Son, the Chairman of Softbank (9984.JP),  who is the financial spearhead of the just announced ‘Stargate Project’ that promises to spend $500b over the next  4 years to build power efficient Ai data centers across the US. 
While we expect at least the initial $100b funding that the partners in the project are promising will be privately funded, with little taxpayer involvement other than infrastructure and lost tax revenue (We note that the taxpayers footed the bill for the Foxconn site to the tune of $426m by 2023 and an additional $257m for high-voltage power lines through electricity rate increases), but actual funding details have yet to be worked out.  Hopefully, taxpayers are not going to be required to be involved in this massive project, as its long-term benefits will likely accrue to the partners, but more important are the timelines and how the project is going to provide itself with power without tapping into the national grid or further destroying the environment with fossil fuel power plants.  Once the politicians and plutocrats move on to the next headline, it will be interesting to see whether Project Stargate becomes another ‘Foxconn Wisconsin’ or actually does anything other than making its wealthy partners more wealthy.