Direction of Business Management

Establishing SHARP, a Powerful Corporate Brand

In the three years since fiscal 2017, Sharp has pursued transformation in the three fields of business, area of competition, and operations in order to quickly revitalize business performance and establish a firm foundation for the future. Moreover, Sharp quickly and flexibly responded to numerous environmental changes that arose in fiscal 2020 to produce even greater improvement in business performance and establish a positive balance in free cash flow and, through strategic actions such as spinning off device businesses and pursuing M&A, took decisive action to position the company for accelerated growth.

The results achieved from these will be used starting in fiscal 2021 as a foundation for building a business promotion system centered on brand businesses, for realization of our business vision, and for a return to corporate bond markets, all for the sake of establishing SHARP, a powerful corporate brand.

1. Building a Business Promotion System Centered on Brand Businesses

Sharp uses its three core brand businesses, along with the two device businesses that support them, in an integrated fashion to pursue “One Sharp” business. With regard to brand businesses, a key focus for Sharp is global expansion, new business creation, and stronger cost competitiveness in B2B display business. Thus, in November 2020, Sharp acquired Sharp NEC Display Solutions, Ltd. as a subsidiary in order to capitalize on its strong presence in the European and North American market. Sharp is also focused on upgrading its AIoT* strategy and, towards that end, made AIoT platform business-driven AIoT Cloud Inc. into a wholly owned subsidiary of Dynabook Inc., which develops PC-driven IT business, thereby facilitating stronger collaborative integration within Sharp’s ICT Group. For its brand businesses, Sharp will continue to actively pursue M&A and collaboration with other companies, along with stronger cooperation among its businesses, for the sake of producing featured devices, services, and solutions more quickly and expanding Sharp business worldwide.

With regard to its device businesses, Sharp has now spun them all off as separate businesses, starting with electronic devices in April 2019, display devices in October 2020, and camera modules in April 2021. Also, with the intention of accelerating development of next-generation displays, Sharp acquired the Hakusan Plant of Japan Display Inc. in October 2020, first putting the LCD panel production line into operation in February 2021. Sharp’s device businesses will continue to leverage collaboration with other companies for the sake of stronger cost competitiveness and the development of innovative devices that help ensure Sharp’s brand businesses maintain their competitive edge.

  • AIoT is a word coined by Sharp, combining the words AI (artificial intelligence) and IoT (Internet of things). AIoT is a vision of how products and services will connect to artificial intelligence via the cloud and become a people-oriented existence. AIoT is a registered trademark of Sharp.

2. Realization of Our Business Vision

Sharp is working to realize its business vision by creating featured devices powered by cutting-edge technologies, such as 8K+5G and AIoT, which contribute to an expansion in sales globally; by creating systems that integrate this hardware with software and services; and by building a platform unique to the Sharp Group that links together different systems, with all of these facilitating Sharp’s ability to provide original solutions in a variety of different areas.

As of June 31, 2021, Sharp has seen growth in its sales, centered on Japan, of a diverse range of 8K+5G equipment, including 8K TVs, 8K cameras, 8K PCs, and 8K+5G smartphones, along with AIoT devices encompassing 567 models in 11 different categories. In terms of overseas markets, Sharp has been focused on future expansion of its 8K+5G and AIoT business, with expansion in product categories and lineup being used to drive business expansion in ASEAN countries and sales structure reorganization and brand business reestablishment being implemented in Europe, the Americas, and China.

Moving forward, for Japan, Sharp is focused on smart home, smart office, and entertainment-related areas, leveraging the business foundation that it has cultivated in order to offer innovative and full-fledged services and solutions; to create new business in the areas of health, medicine, and nursing care; to further develop its factory automation solutions; to capitalize on the government’s GIGA School Project in order to expand its education-oriented business; and to pursue other initiatives that will secure Sharp’s position in both new and established areas of business. Outside Japan, Sharp is focused on greater global expansion for its 8K+5G and AIoT devices, particularly in Europe, the Americas, Taiwan, and ASEAN countries, and is pursuing accelerated establishment of a business foundation for the future.

3. Return to Corporate Bond Markets

In order for Sharp to continue growing sustainably, it is essential that it build a stronger financial base. Therefore, Sharp is currently working to maximize its operating cash flows (CF) through an emphasis on quality over quantity and on reducing working capital. It is also accelerating efforts to improve investment efficiency, such as by expanding investment in brand businesses expected to provide stable revenue and by acquiring external funds in device businesses. Through these efforts, Sharp will create stable free cash flow (FCF) every year to provide appropriate shareholder returns, and it will take action to improve its financial position, such as by reducing interest-bearing debt. Sharp is also working to return to corporate bond markets in the future.

Through efforts in each of the ESG areas, we will contribute to the realization of a sustainable society and seek to build a strong business infrastructure capable of supporting sustainable growth.

With regard to the environment, in February 2019, Sharp formulated its long-term environmental vision, SHARP Eco Vision 2050, which establishes long-term targets for 2050 in the three areas of climate change, resource recycling, and safety and security, with the ultimate aim of helping realize a sustainable global environment. In the area of climate change, countries around the world have been accelerating their efforts in recent years, and Sharp is working to, by 2050, achieve net zero CO2 emissions from its corporate activities and to generate clean energy in excess of the energy consumed throughout the supply chain. In order to reach these goals, Sharp is growing its energy solutions business, improving the energy-saving performance of its products, and further streamlining fuel and electricity usage in its business activities.

With regard to society, Sharp is using its business activities centered on eight priority business areas to help address various issues facing society. An example of Sharp’s contribution to society is its response to the government’s request for help in February 2020, when there was a severe shortage of face masks in Japan. The Sharp Group started production of masks at its Mie Plant in March, and, a little over a year later, had delivered more than 200 million masks. Other examples include a photocatalyst spray, high-performance face shields, cold-retention material that can be used for vaccine delivery, and various other health-related products that Sharp is actively developing. Sharp will continue to use such efforts focused on ensuring public health, safety, and security in order to contribute more to society. Sharp is also working on stronger initiatives to prevent and effectively address social problems, such as human rights concerns connected with the supply chain.

With regard to governance, Sharp is focused on cultivating the sort of corporate governance that leads to improved corporate value. Towards that end, it has established a special committee to review the necessity, reasonableness, and appropriateness of business dealings conducted between the Sharp Group and its parent company group and increased the number of independent outside directors. Moving forward, Sharp will pursue structural development aimed at further improving the functioning of the Board of Directors and will work to strengthen Group governance. Furthermore, Sharp will emphasize more relevant information disclosure and ongoing dialogue with stakeholders.

EExecuting the SHARP Eco Vision 2050

  • Achieve net zero CO2 emissions from our own business activities by 2050
  • Generate clean energy in excess of the energy consumed throughout our supply chain
  • Minimize the environmental impact of our business activities on the planet

SContributing to Society through Business Activities

  • Resolving social issues centered on eight business areas
  • Promoting CSR throughout the supply chain
  • Continuous and global social contribution

GBuilding Corporate Governance that Improves Corporate Value

  • Rebuilding the Board of Directors structure to improve its function
    (e.g. diversification of experience, evolution/diversification of expertise)
  • Strengthening group governance
  • More appropriate information disclosure and continuing dialogue with stakeholders