China iPhone factory under lockdown boosts bonuses for workers who stay

BEIJING - The world's largest iPhone factory in central China told staff Tuesday it would quadruple their bonuses if they remained at the plant after scores of workers fled a Covid outbreak at the facility.

China is the last major economy committed to a zero-Covid strategy, persisting with snap lockdowns, mass testing and lengthy quarantines in a bid to stamp out emerging outbreaks.

But new variants have tested local officials' ability to snuff out flare-ups faster than they can spread, causing much of the country to live under an ever-changing mosaic of Covid curbs.

Taiwanese tech giant Foxconn's plant in Zhengzhou has been under lockdown since mid-October, with the company saying it is testing employees daily and keeping them in a closed loop.

But complaints from workers circulating on Chinese social media have alleged poor working conditions and inadequate virus protection for employees who are not infected.

Videos shared online over the weekend showed Foxconn employees fleeing the company's campus and returning to their hometowns on foot, in a bid to avoid Covid travel restrictions.

Foxconn's Zhengzhou plant said on its official WeChat account that, starting from Tuesday, employees will receive a daily bonus of 400 yuan ($55) for showing up to work -- quadruple the previous subsidy of 100 yuan a day.

Staff will also receive additional bonuses if they attend work for 15 days or longer in November, reaching 15,000 yuan if they record full attendance this month.

Foxconn -- which supplies iPhones to US tech firm Apple -- has promised to do more to help employees and organize buses to transport workers back to their hometowns should they wish to leave, in what it has called a "protracted battle" against the virus.

Local governments in the area surrounding the city asked fleeing workers to register with authorities if they returned home and to complete several days of quarantine upon arrival.

The southern semi-autonomous territory of Macau also announced mass testing of its 700,000 population Tuesday after a handful of cases were discovered, triggering a lockdown of one of its casinos.

It is a fresh blow for the city's struggling gambling industry, which had been poised for recovery after plans to relax travel between mainland China and the former Portuguese colony this month.

China reported more than 2,000 fresh domestic infections Tuesday for the second straight day, as curbs ramped up in response to a wave of regional outbreaks. 

The southern Chinese manufacturing hub of Guangzhou also announced partial lockdowns in several districts Monday in response to rising case numbers.

Guangzhou reported more than 520 fresh infections on Tuesday.

New outbreaks have also emerged in northern cities near China's border with Russia and North Korea as winter approaches.

Agence France-Presse

iPhone manufacturer says to make ventilators in COVID-19 fight

TAIPEI - Taiwanese electronics manufacturer Foxconn will make ventilators with US firm Medtronic Plc to help patients afflicted by the coronavirus outbreak, the company said on Wednesday.

Foxconn, formally known as Hon Hai Precision Industry Co Ltd, is best known for assembling Apple's iPhones at factories in China.

In a statement released through company founder Terry Gou's office, Foxconn said it was currently cooperating with Medtronic to design and develop ventilators, and medical and technical personnel from both firms were working closely on this.

The companies hope to speed up production time so the ventilators can be put to work as soon as possible, it added.

Medtronic Chief Executive Officer Omar Ishrak told CNBC that Foxconn's Wisconsin plant would be used to make the ventilators.

Other companies in the United States are also rushing to make ventilators as the coronavirus spreads rapidly there.

Ford Motor Co said last week it will produce 50,000 ventilators over the next 100 days at a plant in Michigan in cooperation with General Electric's healthcare unit, and can then build 30,000 per month as needed to treat patients infected by the coronavirus. 

-Reuters-

Apple supplier Foxconn aims to resume production in virus-hit China by month-end

TAIPEI - Taiwan's Foxconn hopes to resume half of its production in China by month-end, a source told Reuters on Wednesday, as the supplier to tech giant Apple and others reopens plants shut over a coronavirus outbreak.

The world's largest contract electronics maker also aims to resume 80 percent of production in China in March, added the source, who has direct knowledge of the matter, citing internal targets set by Chairman Liu Young-Way.

Foxconn's reopenings after the Lunar New Year holiday were delayed by the rapid spread of the virus in China, which has killed more than 1,100 people, as the World Health Organization warned against a global threat potentially worse than terrorism.

"Chairman Liu hopes by end of February the production could reach 50 percent," said the person, who declined to be identified in the absence of authorization to speak publicly.

"Shipments will be affected, but it's too early to give an exact number. We might still have a chance to make it with overtime, but we also need to monitor consumer sentiment to come for the end products," the source added.

The reference was to electronics, including smartphones.

Foxconn did not immediately respond to email and telephone calls to seek comment.

Foxconn got the green light this week to reopen major plants in China, and its plant in the eastern city of Kunshan was also approved on Tuesday to resume production, an internal document reviewed by Reuters showed.

But just about a tenth of the workforce had returned to two key plants in southern Shenzhen and central Zhengzhou as of Monday, a source told Reuters.

The two plants make up the bulk of Foxconn's assembly lines for Apple's iPhones and further delays to production after the enforced closures could hit global shipments.

Apple estimated first-quarter revenue in a wider range than usual to factor in the virus uncertainty.

On Monday, Foxconn reported a drop of 12 percent in revenue in January from a year ago, to T$364.6 billion ($12 billion). It did not give details.

Shares of Foxconn, formally Hon Hai Precision Industry Co Ltd, gained 1.6 percent in Wednesday trade, outperforming a gain of 0.8 percent in the benchmark.

They have lost more than 8 percent since the market reopened after the holiday break.

source: news.abs-cbn.com

Staff making iPhones in central China plant to be quarantined

TAIPEI - Workers making iPhones at tech giant Foxconn's plant in central China will be quarantined for up to 2 weeks, the company said Thursday, as cities on the mainland tighten their defenses against the deadly coronavirus outbreak.

Also known by its official name Hon Hai Precision Industry, Foxconn is the world's biggest contract electronics maker and assembles Apple's iPhones, as well as gadgets for other international brands.

Foxconn's vast network of factories in China, including one of its largest in Zhengzhou in central Henan province, are set to resume operations on Feb. 10 after an extended Lunar New Year holiday caused by the outbreak. 

But the company said it has advised instate and out-of-state employees at the Zhengzhou plant to be quarantined for 7 and 14 days, respectively, in accordance with local government policies.

China's industrial base has been buffeted by the outbreak of the virus, which began in the manufacturing hub of Wuhan in central China but has since spread to more than 20 countries. 

The number of confirmed infections has hit more than 28,000 in China while death toll passed 560 in an outbreak that has spiraled into a global health emergency.

The virus is also set to have an impact on international supply chains and manufacturing given China's lynchpin role in the global economy. 

Foxconn now projects a sales increase of 1 to 3 percent this year, down from a January forecast of 3 to 5 percent, chairman Young Liu told Bloomberg News.

Foxconn has tried to allay fears of production shortfalls, saying it had previous experience of viral outbreaks following the SARS epidemic in 2003. 

It is China's biggest private-sector employer with more than 30 factories and research facilities -- including 1 in Wuhan.

Taiwan has reported 11 confirmed cases so far, mostly people returning from Wuhan.

The government announced Thursday that all foreigners who resided or visited China, Hong Kong or Macau in the past 14 days will be temporarily barred from entering the island. 

Foreigners with residency permits in Taiwan returning from these areas must undergo a 14-day stay-home quarantine.

source: news.abs-cbn.com

iPhone 11 launch marred by claims Foxconn factory broke labor laws

One day before the launch of the iPhone 11, Apple and its Chinese supplier Foxconn have been accused of violating labor laws to produce the new model.

New York-based China Labor Watch (CLW) released a report on Monday detailing a string of alleged violations at Foxconn’s Zhengzhou factory, in the central province of Henan, mostly relating to the employment conditions of temporary workers.

According to the report, temporary workers – recruited through contracted agencies – now make up half or more of the workforce at the Zhengzhou facility, with workers putting in at least 100 overtime hours a month.

China’s labor laws stipulate that temporary workers “shall not exceed 10 percent of the total workforce” and that “monthly overtime work hours shall not exceed 36 hours”.

The report also found temporary workers allegedly did not receive the same benefits as full-time employees, including paid sick leave, paid holidays and social insurance which provides medical, unemployment and pension coverage.

Chinese labor regulations require temporary workers – who should not be recruited for primary roles – to be paid the same level of salary, insurance and other benefits as permanent staff.

Foxconn started recruiting temporary workers – also known as “dispatch workers” – in 2016 through the use of labor hire companies which typically offer one-off “bonuses” to attract the workers they recruit. The employees have no direct employment relationship with Foxconn until they sign a contract with the factory, usually after working there for three months.

“Apple has done very little to improve the rights of workers in their supplier factories,” CLW said. “Apple claimed they care about every worker on the production line but, in fact, workers are paid wages that are close to or equivalent to the local minimum wage.”

Zhengzhou Foxconn – dubbed Apple’s “iPhone City” – is the biggest iPhone factory in the world and has previously come under fire over working conditions at the 1.4 million square meter (15 million sq ft) facility, where half the world’s iPhones are made. A series of suicides and protests by workers – allegedly over payment and harsh working conditions – have made headlines over the years.

In January 2018, a temporary worker jumped to his death from Zhengzhou Foxconn’s dormitory complex, apparently because he did not receive his bonus. In December, hundreds of temporary workers took to the streets of Zhengzhou claiming they had been cheated by the recruitment agencies out of their $870 bonuses.

Photographs and videos posted online showed groups of workers holding placards which read: “Illegal agents with Foxconn cheated migrant workers. Give me back my money.” One video showed people chanting, “We want our bonus money”. The protests were broken up by police.

CLW said its investigators, who had been employed at the factory for years, found working conditions had remained relatively unchanged. The base wage was still 2,100 yuan (US$295) which was insufficient to sustain a family living in Zhengzhou. Social insurance contributions had increased from 2015 to 2018, but still fell short of legal requirements, CLW said.

Other violations CLW found included recruitment of student workers, a lack of adequate personal protective equipment and safety training, and a failure to report work injuries. Supervisors also commonly used verbal abuse, the report said.

Apple conceded the number of dispatch workers was high, but dismissed most of the report.

“We did find during our investigation that the percentage of dispatch workers exceeded our standards and we are working closely with Foxconn to resolve this issue,” Apple said.

“We looked into the claims by China Labor Watch and most of the allegations are false. We have confirmed all workers are being compensated appropriately, including any overtime wages and bonuses, all overtime work was voluntary and there was no evidence of forced labor.”

Apple also said robust management systems were in place, including training on workplace rights, on-site worker interviews, anonymous grievance channels and ongoing audits.

Foxconn Technology Group confirmed that a recent review of its Zhengzhou operations had identified some workforce compliance issues, but also rejected the bulk of CLW’s claims.

“At no time did we find any evidence of forced labour and we can confirm that this facility currently has no interns working overtime,” Foxconn said.

“We did find evidence that the use of dispatch workers and the number of hours of overtime work carried out by employees, which we have confirmed was always voluntary, was not consistent with company guidelines. We did determine that the affected workers were paid all earned overtime and related bonus payments.”

Foxconn said work continued to address the issues identified at the Zhengzhou facility, which was being closely monitored. “We will not hesitate to take any additional steps that might be required to meet the high standards we set for our operations.”

Foxconn said it worked hard to comply with all relevant laws and regulations. “In all cases, and with all types of workers, we offer an industry-competitive salary and related benefits that significantly exceeds government-mandated levels.”

Copyright (c) 2019. South China Morning Post Publishers Ltd. All rights reserved.

Populist pro-China mayor to face Tsai in Taiwan presidential clash

TAIPEI - A populist mayor who favors closer ties with Beijing was announced as the presidential candidate for Taiwan's opposition on Monday as it looks to unseat President Tsai Ing-wen in upcoming elections.

Han Kuo-yu won the primary for the opposition Kuomintang party, comfortably seeing off a challenge from Taiwan's richest man, billionaire Foxconn founder Terry Gou.

His victory sets up an unpredictable clash as Taiwan goes to the polls in January in a contest that will be dominated by relations with China.

Han, 62, has had a meteoric rise in the last two years, journeying from relative obscurity to becoming his party's presidential candidate in a phenomenon that has been dubbed the "Han tide".

Some have likened him to US President Donald Trump and other populist leaders who hail from outside establishment circles and command a fervent voter base buoyed by lofty promises of resurrecting their fortunes.

Han won 45 percent of votes cast in the KMT's primary -- which polls members of the public by telephone -- compared with Gou's 28 percent, a major setback for a man who made his fortune assembling iPhones and other key electronic devices in huge factories on the Chinese mainland.

Han was a relative unknown until he seized the Kaohsiung mayoralty in local elections last year in a contest few thought he would win given the southern city had long been a heartland for Tsai's ruling Democratic Progressive Party.

He has been able to muster huge, enthusiastic crowds during his presidential bid, where he has vowed to restore warm ties with Beijing and kickstart the economy.

Relations with Beijing have soured since Tsai came to power three years ago because she and her party refuse to recognize the idea that Taiwan is part of "one China". 

Since her election Beijing has cut official communications, ramped up military exercises, poached diplomatic allies and ratcheted up economic pressure on the island. 

Taiwan has been a de facto sovereign nation since the end of a civil war in 1949 but China still views it as its own territory and has vowed to seize it, by force if necessary.

Tsai has described the 2020 presidential election as a "fight for freedom and democracy", setting herself up as someone who can defend Taiwan from an increasingly assertive Beijing. 

Supporters see Han as a plain-talking maverick and political outsider who has shaken up the staid politics of the KMT -- but detractors are unnerved by his efforts promoting warmer China ties.

aw/jta/qan

source: news.abs-cbn.com

In inland Chinese province, property bubble haunts dreams of prosperity

ZHENGZHOU, China - Song Jingyi, a paralegal from a family of modest means in the central Chinese region of Henan, had long dreamed of buying a home of her own in Zhengzhou, the sprawling provincial capital of 10 million where she attended college.

But high prices, and hefty downpayment requirements, meant that dream stayed tantalizingly out of reach.

Zhengzhou's property market exploded in 2016, spurred on by Chinese government efforts to boost home ownership and consumer spending in interior provinces like Henan.

While the resulting price surges were a new source of wealth for many in the city, they also excluded people like Song, who is 25 and has plans to marry her long-term boyfriend.

Last November, however, Song was presented with a tempting opportunity: a deal offered by a Chinese developer to circumvent the usual 30% downpayment on an apartment by borrowing the up-front payment itself.

The offer was a risky one for a developer - and a warning sign that the market in Zhengzhou was hitting a wall, caught up in China's slowest economic expansion in nearly three decades.

After two years of breakneck growth, property markets in provincial cities like Zhengzhou finally reached a turning point in late 2018. That has presented a policy challenge for the Chinese government, which has been attempting to spread wealth beyond the country's rich coastal regions to the interior.

It also illustrates how policymakers have struggled to grapple with a property market, the world's largest, that is crucial for growth yet prone to bubbles springing up in unlikely places - including the cities of Henan province.

Despite the warning signs, Song saw the mortgage offer as a golden opportunity to finally get into the Zhengzhou market.

She paid one-third of the usual down payment as deposit on a two-bedroom flat on Zhengzhou's outskirts, where seemingly endless rows of blocks have proliferated in recent years.

However, Song soon noticed that prices were dropping at some developments - including one where a friend had bought a home.

She had longed for a taste of the middle class lifestyle her friends were flaunting with their apartments packed with consumer goods. But she also didn't want to buy into a bubble that looked set to pop.

She decided to pull out, ultimately filing a lawsuit to get her deposit back.

"I felt that everyone around me had a house and I felt so much pressure from my peers," Song said. "In many ways, that was an illusion of false prosperity."

BACKWATER NO LONGER

Long a quiet provincial capital, Zhengzhou has thrived in recent years thanks to its position as a transport and logistics hub. Taiwan's Foxconn operates a factory in the city employing 230,000 people making Apple iPhones for the world.

And, for two years, the property market boomed.

The skyline is packed with soaring office towers in a newly constructed business district. Flashy malls selling luxury goods jostle for space in the crowded city centre. And freshly minted residential blocks stretch far into the suburbs.

Zhengzhou's property market took off when the Chinese government eased borrowing and credit restrictions in 2015 and 2016, setting off a nationwide home-buying frenzy.

Attracted by cheaper prices in interior provinces like Henan, buyers from across the country piled into Zhengzhou, many paying in full, in cash, to secure flats that often sold out within minutes.

In September 2016, at a new Evergrande apartment complex, a couple in their 40s told Reuters, wiping away tears of disappointment, that they drove from a nearby city only to be told that everything had been sold.

And prices kept soaring.

In the upscale Beilonghu district, overlooking an artificial lake on Zhengzhou's northern fringe, rows of opulent villas decorated with the sweeping roofs of traditional imperial residences went for tens of millions of yuan, rivalling prices in Sydney on a per square foot basis.

But in September last year, the Zhengzhou property market deteriorated rapidly, according to sales agents. Unsold property inventory in Zhengzhou rose 26.5% last year, compared to a 26.9% decline in 2016 at the peak of the boom.

Nationally, property sales by floor area grew 1.3% in 2018 from a year earlier, down from an increase of 7.7% a year earlier. In Henan, the growth slowdown was more dramatic: down to 5.1% last year, from 17.8% in 2017. Henan's real estate investment fell for the first time in 2018.

While the slowing Chinese economy is a key factor in the slump, it is also the result of government efforts to curb rampant property speculation and clean up a chaotic and risky financial system - even as it tried to spur spending and home ownership in places like Henan.

China's housing ministry did not respond to a request for comment.

RIPPLE EFFECTS

The effects of the slowdown in Zhengzhou have been felt by people like Zhang Chenxuan, who has run an interior design business in the city for seven years. Since last year, his income has shrunk by 20-30% as orders from new home buyers fell, he said.

"Clients nowadays only want something practical and simple that saves money instead of going for the luxurious," Zhang said as he fitted out a client's new apartment with contemporary furniture and grey ceramic tiles.

"Eighty percent of my customers now complain that they are very poor, that they don't have the money for proper furnishings," he said.

Zhengzhou's government has eased some purchase restrictions and scrapped price caps for new developments to encourage developers to release inventory, local agents said. But so far, those measures, and similar ones in other cities, have done little to revive the market.

The property slowdown has also been deeply felt in Xuchang, a city of about 4 million people south of Zhengzhou that is the world's wig-making capital.

Like Zhengzhou, the city had been the scene of frantic property development and buying in recent years. To lure builders and buyers, the local government moved wig-making businesses to the city's fringes, spent tens of billions of yuan demolishing shantytown homes, and built a series of lakes and parks, including a gigantic "Central Park" modeled on the one in Manhattan.

Those efforts attracted developers like Evergrande and Country Garden, who built vast complexes overlooking the park.

But the frenzy faded. Property consultancy Tonglitongcheng said in February that the city's housing stock had grown at such "a horrifying rate" that unsold inventory - totalling 9.7 million square metres by its estimates - would take about 55 months to clear.

Xu Boyun, 27, said his family, which owns three properties in Xuchang, was passing on buying a unit in another new development, despite the 20% discount offered to staff at the state-owned company where his parents work.

"It was a really good price but the market has cooled significantly and I've advised them there is not much room for another price spike," he said.

In some developments, prices have been slashed, infuriating those who bought in at higher prices.

In November, angry home owners stormed a Yango Group sales office after the company cut prices by 15% in one development, smashing scale models of the project, sales agents told Reuters.

While Yango hasn't cut prices further, it is now branding its apartments as "cost effective", and touting the market slump as a "rare opportunity" to buy.

It's unclear whether that will be enough to attract buyers to developments in provincial cities like Xuchang.

For Song, the paralegal, safer bets closer to cities like Beijing are a more attractive option for now.

In March, she said her boyfriend made a downpayment - a complete one - on a flat in Zhangjiakou, a ski resort near Beijing that will host some events for the 2022 Winter Olympic Games.

Speculators were eyeing the town, she said, but prices were still just a sixth of the average in Beijing.

"Even if prices fall, how much lower do you think they can go?"

source: news.abs-cbn.com

Foxconn reconsidering plans to make LCD panels at Wisconsin plant

Foxconn Technology Group is reconsidering plans to make advanced liquid crystal display panels at a $10 billion Wisconsin campus, and said it intended to hire mostly engineers and researchers rather than the manufacturing workforce the project originally promised.

Announced at a White House ceremony in 2017, the 20-million square foot campus marked the largest greenfield investment by a foreign-based company in US history and was praised by President Donald Trump as proof of his ability to revive American manufacturing.

Foxconn, which received controversial state and local incentives for the project, initially planned to manufacture advanced large screen displays for TVs and other consumer and professional products at the facility, which is under construction. It later said it would build smaller LCD screens instead.

Now, those plans may be scaled back or even shelved, Louis Woo, special assistant to Foxconn Chief Executive Terry Gou, told Reuters. He said the company was still evaluating options for Wisconsin, but cited the steep cost of making advanced TV screens in the United States, where labor expenses are comparatively high.

"In terms of TV, we have no place in the US," he said in an interview. "We can't compete."

When it comes to manufacturing advanced screens for TVs, he added: “If a certain size of display has more supply, whether from China or Japan or Taiwan, we have to change, too.”

Rather than a focus on LCD manufacturing, Foxconn wants to create a "technology hub" in Wisconsin that would largely consist of research facilities along with packaging and assembly operations, Woo said. It would also produce specialized tech products for industrial, healthcare, and professional applications, he added.

“In Wisconsin we’re not building a factory. You can’t use a factory to view our Wisconsin investment,” Woo said.

Earlier this month, Foxconn, a major supplier to Apple Inc., reiterated its intention to create 13,000 jobs in Wisconsin, but said it had slowed its pace of hiring. The company initially said it expected to employ about 5,200 people by the end of 2020; a company source said that figure now looks likely to be closer to 1,000 workers.

It is unclear when the full 13,000 workers will be hired.

But Woo, in the interview, said about three-quarters of Foxconn's eventual jobs will be in R&D and design - what he described as "knowledge" positions - rather than blue-collar manufacturing jobs. Foxconn is formally known as Hon Hai Precision Industry Co.

Rather than manufacturing LCD panels in the United States, Woo said it would be more profitable to make them in greater China and Japan, ship them to Mexico for final assembly, and import the finished product to the United States.

He said that would represent a supply chain that fits with Foxconn's current "fluid, good business model."

Heavily criticized in some quarters, the Foxconn project was championed by former Wisconsin Governor Scott Walker, a Republican who helped secure around $4 billion in tax breaks and other incentives before leaving office. Critics of the deal, including a number of Democrats, called it a corporate giveaway that would never result in the promised manufacturing jobs and posed serious environmental risks.

"Every step of the way Foxconn has overpromised and under-delivered," Democrat Gordon Hintz, the minority party leader in the state assembly, said in a Wednesday statement. "This news is devastating for the taxpayers of Wisconsin."

The company’s own growth projections and employment goals suggest the taxpayer investment would take at least 25 years to recoup, according to budget think tank the Wisconsin Budget Project.

Foxconn CEO Gou plans to meet with Wisconsin's new Democratic governor, Tony Evers, a past critic of the deal, later this year to discuss modifications of the agreement, according to the source familiar with the company's thinking.

The Office of the Governor said in a Wednesday statement it has been in contact with senior leadership at Foxconn since the Reuters story was published. Evers' aide Joel Brennan said the team was "surprised" by the development.

Some "details about the continuing evolution of this project will require further review and evaluation," Brennan said in the statement.

Currently, to qualify for the tax credits Foxconn must meet certain hiring and capital investment goals. It fell short of the employment goal in 2018 - hiring 178 full-time jobs rather than the 260 targeted - failing to earn a tax credit of up to $9.5 million.

The company may be prepared to walk away from future incentives if it is unable to meet Wisconsin's job creation and capital investment requirements, according to the source familiar with the matter.

source: news.abs-cbn.com

Foxconn agrees to buy Sharp after slashing original offer

TOKYO/TAIPEI - Taiwan's Foxconn agreed to acquire Sharp Corp at a big discount to its original offer after a month of wrangling that sowed more doubts over whether the two companies can work well together and fend off fierce competition from smartphone display rivals.

Foxconn, formally known as Hon Hai Precision Industry Co, will pay about $3.5 billion for a two-thirds stake, nearly $900 million less than its initial offer, the companies said.

The deal marks the largest acquisition by a foreign company in Japan's insular tech industry and the end of independence for a 100-year-old company that started out making belt buckles and mechanical pencils.

It would also give Foxconn control of Sharp's advanced screen technology and help strengthen its pricing power with major client Apple Inc.

Highlighting Sharp's dire finances, the ailing display maker estimated an operating loss of around 170 billion yen ($1.5 billion) for the year through Thursday in contrast to its earlier profit forecast of 10 billion yen.

Foxconn said it will buy Sharp's shares at 88 yen per share, a 35 percent discount to their close on Wednesday.

The two companies had been on the verge of finalizing a deal last month but Foxconn postponed at the last minute following the emergence of previously undisclosed contingent liabilities at Sharp.

The hitch revived ill will from four years ago, when Foxconn agreed to take a stake in Sharp as part of a broader partnership. Sharp then warned of losses and Foxconn walked away as the shares sank.

Analysts said that even without the history of distrust, there was little assurance the combined company will be able to deflect pricing pressure in LCDs or beat rivals in OLED, a new screen technology which Apple is expected to adopt for its iPhones by 2018.

"If you are talking about two years, it will be difficult. Three years, there is potential. Five years, then definitely,” said Kylie Huang, analyst with Daiwa-Cathay Capital Markets in Taipei.

She added that Samsung Electronics' display unit and LG Display will for some time likely remain the preferred choice for OLED or organic light-emitting diode screens which are thinner, lighter and more flexible than other displays.

Shares in Sharp rose 4 percent on Wednesday ahead of the announcement. The Taiwan Stock Exchange suspended trading in Foxconn shares for the Wednesday session.

Although the Japanese firm became a highly-profitable manufacturer of premium TVs, massive investments in advanced liquid crystal display (LCD) plants failed to pay off as more nimble Asian rivals slashed prices. Two bank bailouts since 2012 have failed to help turn its business around.

The Yomiuri newspaper reported on Wednesday that the Taiwanese company was planning to overhaul Sharp's management including replacing its CEO.

Sharp has said Foxconn is set to pick a majority of its board. But investors had expected it to leave much of management in place for some time. Sources had said earlier this year that Foxconn Chief Executive Terry Gou offered to keep most members of top management in place, and to not fire employees.

Foxconn executives in Taipei declined to comment on plans for CEO Kozo Takahashi, saying more details would be available at a signing event and news conference on Saturday.

source: www.abs-cbnnews.com