Sharp OLED Competition?
There are many TV brands represented in the US, with Best Buy (BBY) and Walmart (WMT) listing over 20 and Amazon (AMZN) listing over 25 TV brands offered. But while US TV consumers have choices when it comes to LCD TVs, they have far less choice when it comes to OLED TVs. OLED TV brands are plentiful on a global basis, with over 20 brands having at least a single model (albeit some a bit dated), and while this was not a good year for the TV market in general, ~7m OLED TV sets were shipped globally, for a ~3.5% share of the overall TV market. In the US however, a quick look at the OLED TV market shows that it is dominated by three or four brands, and few, if any other OLED TV brands are sold in the US market. Until last year, LG (066570.KS) and Sony (SNE) were the dominant OLED TV brands sold in the US, with Vizio (VZIO) entering the US OLED TV market in 2020, and Samsung Electronics (005930.KS) entering the OLED TV market last year with its QD/OLED TVs.
One brand that has been conspicuously absent from the US market has been the Japanese TV brand Sharp (6753.JP), who built a reputation on calculators and later microwave ovens, built the world’s first Gen 10 LCD plant in 2004, years ahead of other panel manufacturers, and was the leader in large-size LCD TVs. By 2010 however, the company faced mounting losses and instituted staff reductions in 2012, but was unable to recover sustainable profitability, being forced to sell a 50% stake in its Sakai LCD plant to then Hon Hai (2317.TT) chairman Terry Gou and 10% stake in the overall company to Hon Hai (aka Foxconn (2354.TT)) for a bit over $800m US.
While the Foxconn stake kept the company afloat for a while, in 2015 Sharp sold its Mexico assembly plant to China’s Hisense (000921.CH) for $23.7m US, along with the rights to the Sharp brand name in North and South America, where it had a ~4.5% share of the US TV market. In 2016 Foxconn announced it would raise its Sharp stake up to 66% for an additional $6.24b US, but after additional financial issues were revealed, the payout was reduced to $3.5b US. In 2017, after a restructuring by Foxconn, Sharp began legal proceedings against Hisense, who they said was producing low quality TV sets using the Sharp name and a protracted legal battle ensued, ending with Sharp buying back the brand name rights in the US in 2019 for an undisclosed sum and was expected to return to the US TV market that year. While Sharp’s TVs are sold on Amazon to US customers, the brand remains under-represented in the US although it is still a major brand in Japan.
With all of that said, we expect Sharp to enter the US OLED TV market this year, likely with assembly being done at the Mexico plant, which is now owned by Foxconn, and will likely be Roku (ROKU) based, as their LCD TVs have been, which would be the first 4K Roku OLED TV sold in the US (it sells OLED TVs in Japan and other regions). We believe Sharp will offer at least a 55” and 65” OLED model, but pricing and other specifications are still unknown, although we expect sets will be priced toward the middle of the range relative to LG’s pricing, which would be ~$1,100 to $1,200 for a 55” set and between $1,400 and $1,800 for a 65” set. While we expect Sharp will enter the US OLED TV market with a limited number of models, Sharp does represent a recognizable TV brand name to US consumers, as opposed to many Chinese TV brands and could have the potential to compete with Samsung, LG and Sony, however unless Sharp is able to strike a deal with major retailers, we expect most consumers will stick with those brands featured by Best Buy and Amazon, unless Sharp can prove its TVs are of higher value, a difficult task when competing with the two sole producers of OLED TV displays.
One brand that has been conspicuously absent from the US market has been the Japanese TV brand Sharp (6753.JP), who built a reputation on calculators and later microwave ovens, built the world’s first Gen 10 LCD plant in 2004, years ahead of other panel manufacturers, and was the leader in large-size LCD TVs. By 2010 however, the company faced mounting losses and instituted staff reductions in 2012, but was unable to recover sustainable profitability, being forced to sell a 50% stake in its Sakai LCD plant to then Hon Hai (2317.TT) chairman Terry Gou and 10% stake in the overall company to Hon Hai (aka Foxconn (2354.TT)) for a bit over $800m US.
While the Foxconn stake kept the company afloat for a while, in 2015 Sharp sold its Mexico assembly plant to China’s Hisense (000921.CH) for $23.7m US, along with the rights to the Sharp brand name in North and South America, where it had a ~4.5% share of the US TV market. In 2016 Foxconn announced it would raise its Sharp stake up to 66% for an additional $6.24b US, but after additional financial issues were revealed, the payout was reduced to $3.5b US. In 2017, after a restructuring by Foxconn, Sharp began legal proceedings against Hisense, who they said was producing low quality TV sets using the Sharp name and a protracted legal battle ensued, ending with Sharp buying back the brand name rights in the US in 2019 for an undisclosed sum and was expected to return to the US TV market that year. While Sharp’s TVs are sold on Amazon to US customers, the brand remains under-represented in the US although it is still a major brand in Japan.
With all of that said, we expect Sharp to enter the US OLED TV market this year, likely with assembly being done at the Mexico plant, which is now owned by Foxconn, and will likely be Roku (ROKU) based, as their LCD TVs have been, which would be the first 4K Roku OLED TV sold in the US (it sells OLED TVs in Japan and other regions). We believe Sharp will offer at least a 55” and 65” OLED model, but pricing and other specifications are still unknown, although we expect sets will be priced toward the middle of the range relative to LG’s pricing, which would be ~$1,100 to $1,200 for a 55” set and between $1,400 and $1,800 for a 65” set. While we expect Sharp will enter the US OLED TV market with a limited number of models, Sharp does represent a recognizable TV brand name to US consumers, as opposed to many Chinese TV brands and could have the potential to compete with Samsung, LG and Sony, however unless Sharp is able to strike a deal with major retailers, we expect most consumers will stick with those brands featured by Best Buy and Amazon, unless Sharp can prove its TVs are of higher value, a difficult task when competing with the two sole producers of OLED TV displays.
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