Sharp angrily sued Corning for illicit affairs with Chinese companies, what are the secrets behind the dispute
Since it was acquired by Foxconn, Sharp has been in constant disputes, and the spread of the epidemic cannot stop Sharp’s “rights protection”. No, after suing Rainbow Optoelectronics, TPV and other peer companies at the beginning of this year, Sharp has turned its face with its partners who have cooperated for many years!
According to the Nikkei News, on November 26, Sharp Sakai Plant (SDP) accused Japan Corning of the sale of 10th generation glass substrates to other customers suspected of Chinese companies in the Osaka court, which violated the contract between the two parties. Sharp asked Corning to stop the breach of contract.
It is reported that Japan’s Sharp has cooperated with Corning since 2009, and Corning has built a glass factory in the Sakai factory park in Osaka to stably supply the most advanced LCD panels to Japanese and overseas TV manufacturers. In the past, all of Sharp’s glass for LCD panels was purchased from Corning’s Sakai plant, and Corning could only sell it to other customers when its production capacity remained.
It’s hard to tell right from wrong!
In Sharp’s view, there are two major default points for Corning in Japan:
First of all, Sharp purchases all glass substrates from Corning, and Corning can only sell to other customers when the production capacity remains. Sharp accused Corning of selling panel glass to other panel makers without meeting Sharp’s required shipments.
Secondly, Corning’s land and plant are leased from Sharp. According to the lease agreement, Corning’s production of glass substrates of different sizes must be agreed by both parties. Sharp accused Japan’s Corning of breaching the contract by producing glass substrates of different sizes from those agreed in the contract and supplying them to Chinese companies without consent.
In the face of Sharp’s accusation, Corning responded to Sharp’s breach of contract allegations as groundless. In response, Sharp issued a statement on the evening of the 29th and put forward four rebuttals:
1. The content reported by the Japanese side on Friday, November 27 was to expose the fact that Sharp applied for a false sanction order, and at the end of the article, it was mentioned to seek verification from Corning Japan, but no response was obtained;
2. The Japanese media also responded that the publication was truth-seeking, and the report was fair and unbiased;
3. In today’s response from Corning Japan, Sharp expressed regret and should return to the facts;
4. Sharp hopes that the two parties can continue to maintain a good relationship, and expects Corning to return to abide by the contract and build a good long-term relationship again.
Later, Corning stated that the company had not received legal notices or documents related to the matter, and could not confirm whether a lawsuit had indeed been filed, but the company could clearly point out that any media reports mentioned that Corning had not fulfilled its contractual obligations to Sharp. Claims are baseless.
Corning also pointed out that the company has always fulfilled our obligations and fulfilled our commitment to Sharp. Our relationship has lasted more than a decade; Corning leveraged its leadership in the Display industry to pioneer the development of the world’s first 10-generation large-scale TV glass substrate.
In addition, Corning emphasized that the company will continue to respect all customer relationships and looks forward to a successful resolution of this matter in the spirit of mutual assistance and reciprocity built over the years.
The secret behind the dispute
As for whether Japan’s Corning breached the contract and supplied glass substrates to Chinese manufacturers, it is not yet easy to determine, and further rulings from the court are required.
Sharp and Japan’s Corning have been working together since 2009, but their partners for 11 years have to go to court. It can be seen that this problem must not have just happened, but has existed for some time. It should be that the two sides have conducted several rounds of negotiations, and it was difficult to reach an agreement in the end, so they had to prosecute. From this speculation, Japan’s Corning has been selling Japanese-made glass substrates to China for several months (if Sharp’s allegations are true).
The glass substrate for liquid crystal display is large in size, thin in thickness, high in precision, relatively fragile, and requires high cleanliness, so long-distance transportation must be a last resort. This is also the reason why most panel factories choose glass factories to be built next to panel factories. However, due to the current demand for the housing economy, overseas TV sales have indeed increased significantly. LCD panel prices have risen, resulting in tight supply.
Especially in China, due to the increase in panel production, the supply of glass substrates is insufficient. This shows one point: glass substrates are actually in a state of shortage, and they have been missing for several months. It is only because of the serious shortage of chips recently that everyone has ignored the shortage of glass substrates.
The reason why Sharp sued Japan’s Corning is definitely not to compensate, but to hope that Japan’s Corning will supply him with more glass substrates. Why did Sharp adopt such an extreme method to achieve its own goal? It can be guessed that because the orders received by Sharp are still very strong, and we can see that it will continue in the next few months, so we will not hesitate to hurt the long-term cooperative relationship, but also put the glass Substrate grabbed.
Due to the new crown pneumonia epidemic, the demand for TVs has greatly increased. If sufficient glass for panels cannot be secured, Sharp’s LCD panel production will be affected. If the supply of panel glass continues to be insufficient, Sharp will not only have problems in production, but may also have an impact on maintaining the employment of factory employees.
Moreover, Sharp will definitely not tear his face just because of the needs of just a few months, and he must have made this difficult decision after careful consideration. What Sharp weighs is his judgment on the market development trend: for a long time in the future, the demand for display panels will continue to be strong.
Therefore, Sharp said that it will take all measures to ensure the smooth supply of glass for LCD panels.
In those years, the opponents that Sharp “torn”
The dispute with Corning can only be regarded as a wave on the road of Sharp’s “rights protection”. Among those companies that have “ripped apart” with Sharp, the most famous is Samsung.
The dispute over LCD patent rights between Samsung Electronics and Sharp has a long history. Since 2007, the two parties have accused each other of “infringing their own LCD TV-related patented technology”, and initiated lawsuits in the United States, Japan and South Korea.
The most typical “fight” occurred in 2008-2009. In March 2008, Sharp sued Samsung in the United States for infringing on four of its patents. After a 21-month trial, the US International Trade Commission finally ruled that Sharp won the case last month. Samsung launched a “counter-attack”, and on December 3, 2009, formally submitted a lawsuit against Sharp to the US International Trade Commission (ITC), accusing the latter of infringing its patent rights related to liquid crystal display devices.
On February 5, 2010, Sharp and Samsung signed a settlement agreement to end the two-year-old patent infringement dispute over LCD panels and modules. The two parties have agreed to reach a cross-licensing transaction on LCD panel and module-related technologies, and promptly dismiss all patent infringement disputes.
Under this settlement, the parties will soon withdraw all patent litigation, thereby ending all patent disputes between the two companies. After this settlement, the two companies will be able to jointly use these originally disputed patents.
According to industry analysts, since LCD panels are a high-tech-intensive industry, several panel giants each own some of the patents, but at the same time, they inevitably use the patented technologies of other companies in the manufacturing process. The industry generally uses cross-patents. It is possible to create a complete LCD screen only by licensing each other through mutual authorization.
If Samsung is the most famous of these companies, then the dispute between Hisense and Sharp is the most “dog blood”.
The dispute between Sharp and Hisense began when Sharp was still in the hands of the Japanese. At that time, Sharp was losing money and the business was unsustainable. Therefore, Sharp sold some overseas brand operations to other companies from 2014 to 2015. Among them, the brand authorization in the Americas was sold to China Hisense Company.
Hisense invested US$23.7 million to acquire all the equity and assets of Sharp’s Mexico plant. At the same time, Hisense obtained the brand use rights and all channel resources of Sharp TV in the Americas. The two parties agreed that Hisense will return Sharp’s North American brand authorization on January 5, 2021. At that time, the industry commented that China Hisense was a timely help, and contributed to Sharp’s subsequent turnaround.
However, what I never expected was that in 2017, Sharp, who had survived the difficulties, regretted his cooperation with Hisense.
On the surface, in April 2016, Foxconn’s parent company, Hon Hai, invested US$3.81 billion to complete the acquisition of Sharp. Since then, Hon Hai has been seeking opportunities to take back Sharp’s overseas brand authorization. In the case of unsuccessful negotiations with Hisense, Sharp decided to stop supplying LCD panels to Hisense at the end of last year. In April this year, Hisense notified Hisense in writing to terminate the contract, but Hisense rejected Sharp’s request and continued to sell under the Sharp brand. Sharp’s back-and-forth seems to be caused by the change of the parent company’s major shareholders.
But the actual reasons may be more complicated. After being acquired by Hon Hai, Sharp, the former brother, planned to regain its share of the TV market. According to the internal plan of Hon Hai Group, Sharp will complete the shipment target of 10 million LCD TVs in fiscal year 2018, an increase of nearly 70% compared with this year. If this target is achieved, Sharp will become the third largest LCD TV brand in the world. In this way, it is imperative to regain the original dominance of the North American market.
On June 9, 2017, Sharp filed a lawsuit against Hisense in the California court of the United States, accusing Hisense of selling low-quality and low-priced LCD TVs under the “SHARP” brand in the United States, which damaged the brand image of Sharp, and asked Hisense to stop using the SHARP trademark. And proposed at least $100 million in damages.
In the face of Sharp’s “repaying kindness and revenge” behavior, Hisense will of course not compromise. In the tug-of-war between the two parties, Sharp finally gave up legal means to prevent Hisense from selling Sharp series brand TVs in North America.
Seeing this, people who eat melons will definitely say that these are all adult memories, where is the latest “melon”?
In March of this year, Sharp made a decision on Xianyang Rainbow Optoelectronics Technology Co., Ltd. (CHOT), TPV Technology Limited (TPV Technology Co., Ltd.) and its subsidiaries and Vizio, Inc., which manufacture and sell LCD panels. Filed patent infringement lawsuit in the U.S. District Court for the Central District of California. Sharp said that the above-mentioned companies infringed on Sharp’s 12 patents related to liquid crystal display, including polymer stabilized alignment (PSA) and high-quality display technology.
As a panel company that has not been established for a long time and its strength is not strong enough, why did Rainbow Optoelectronics get involved in this patent battle? Some people in the industry believe that it may be related to the “robbing people” a few years ago.
It is understood that Rainbow Optoelectronics had previously had a “grievance entanglement” with Innolux, a panel company under Hon Hai Group.
Rainbow Optoelectronics started to build the 8.6-generation LCD panel production line in June 2016, and officially mass-produced it in February 2018, only one year later than Innolux’s mass production time, and its monthly production capacity is double that of Innolux above.
At the end of 2016, it was reported in the media that some Innolux employees had switched jobs to Rainbow Optoelectronics, fearing the outflow of key technologies. For this reason, Terry Gou was furious and issued a letter of deposit to 48 resigned employees.
It is worth noting that after Sharp was acquired by Foxconn, it was also included in the Hon Hai Group.
This patent battle, whether it is another “release of anger” by Guo Taiming, or a normal means based on market competition considerations. Companies like Rainbow Optoelectronics and Sharp, which have accumulated more than 40 years of technology, are facing great challenges.
Patent litigation generally takes a long period of time, ranging from months to years. What measures will Sharp take next? Yu Wei, head of Sharp’s LCD brand, said in an interview with a reporter from China Electronics News: “Whether it is enforced or there is a possibility of cross-patent settlement, it is still unknown.”
In the commercial battlefield where you compete, the amount of compensation is no longer the focus. Commercial disputes reflect the increasingly fierce market competition in the industry.
Some industry insiders believe that if the judgment result can confirm the infringement, on the one hand, Sharp can use its existing advantages to seize the global market share; on the other hand, it can also have a deterrent effect and chain reaction on other infringers in the market. And this is the meaning behind these “rights defense”.
The display panel industry is a capital, resource and technology-intensive industry. Upstream equipment and materials have a huge impact on the operating results of panel companies. Therefore, the integration ability of upstream partners is actually as important as its own technological innovation ability. In the case of limited resources, only with the firm support of upstream resources can the midstream capacity, technology, operation and other capabilities be finally converted into products sold, and then into corporate profits.
And who the upstream manufacturers support depends on who is the future of the industry. Since Japan’s Corning risked being sued and supported Chinese companies when demand was so strong, then the glass giant’s lineup is very clear. Moreover, there are many manufacturers as smart as Corning, and they can clearly see who the future belongs to. In the midst of industry changes, it is definitely the most sensible choice to stand in line with Chinese companies.