Did Foxconn Buy Stake In Sharp LCD's Because Of Upcoming Apple TV?

Yesterday's announcement that Hon Hai Precision, also better known as Foxconn, was buying a 10% stake in Sharp's LCD business has left some wondering as to why it would be interested in what is becoming an increasingly money losing business.

Today, Reuters is reporting that the reason may be due to Apple's long rumored entry into the television business, a move that some are saying could completely revolutionize the entire TV business much as the iPod, iPhone and the iPad have already revolutionized their particular industries, and Reuters wrote:

"That could put the Taiwan firm in a strong position to push for orders to make the Apple TV, potentially taking the business from Korean rivals such as LG Display (034220.KS) while furthering Hon Hai's aim to move beyond contract making and boost its brand profile.

"Hon Hai is already the assembler of Apple's iPhone and iPad, it needs the next driver, which is Apple TV," said Yuanta Securities analyst Vincent Chen. "It's something that Terry Gou cannot afford not to do. But this is a very big gamble."

Foxconn is already one of Apple's biggest and most important suppliers and the reasoning goes that its stake in Sharp will help to tighten Foxconn's relationship with Apple which has proven hugely profitable for the Taiwanese firm.

In conclusion, I don't know if Foxconn's recent stake in Sharp was due to Apple's rumored upcoming Apple TV or not, but it's certainly a very real possibility, and one that resulted in seeing Hon Hai's shares raise as much as the allowable maximum 6.9 percent in a trading session in Taipei on Wednesday, and one that also saw Sharp shares correspondingly jump some 15 percent in Tokyo, but speculation that it is due to Apple's rumored TV is just that, speculation.

And that's my 2 cents 4 this not-too-bad-of-a-Wednesday, March 28, 2012