Once Apple supplier Foxconn’s takeover of display-maker Sharp is complete, they will begin cleaning house, as the WSJ reports the company has announced 12 of 13 current Sharp board members will step down once the takeover is complete. The changes are expected to be official by June.
The consumer-electronics company based in Osaka, Japan, said Tai Jeng-wu, Foxconn’s No. 2 executive and the right-hand man of Foxconn Chairman Terry Gou, will succeed current Sharp CEO Kozo Takahashi after the acquisition is completed.
Twelve of 13 Sharp board members, including Mr. Takahashi, will also be replaced, the company said. The Sharp board will then shrink to nine members, with six of them to be appointed by Foxconn.
The Japanese display maker has a history of ever-deepening losses, and on Thursday reported a net loss of ¥256 billion ($2.36 billion) for its fiscal year ended in March, compared with a loss of ¥222 billion in the previous year. CEO Takahashi cited fierce price competition for smartphone and television displays and weaker demand from China, as contributing to the disappointing numbers.
While Foxconn chairman Gou says a turnaround is possible, it will require a fresh round of job cuts once the takeover has completed.
“Unfortunately, a close review of the company’s operations makes it clear that the level of inefficiency throughout Sharp means that a turnaround of the company can only take place if there is a reduction in costs and that comes with a very regrettable need to reduce Sharp’s workforce,” Mr. Gou said in an email that was sent to Sharp employees on Thursday and reviewed by The Wall Street Journal.
Analysts have expressed confidence that Gou can turn things around, but note that the executive is known to frequently change his mind regarding strategic business decisions.
Foxconn formally signed a $3.5 billion deal to acquire Sharp last month. Foxconn executives hope the Japanese company’s expertise in making smartphone panels will help Foxconn to further diversify its business operations.