Update: The WSJ reports that the deal is not yet certain. Sharp may come with some potential financial risks, which Foxconn is evaluating before it actually signs the deal.

Foxconn Technology Group said Thursday it is delaying the signing of a definitive takeover agreement with Sharp Corp. due to new details that the Japanese electronics maker disclosed a day earlier.

Foxconn didn’t elaborate in its statement, but people familiar with the matter said that the Taiwanese iPhone assembler is putting the Sharp deal on hold after reviewing the Japanese firm’s future financial risk. The people said Foxconn received a list of about ¥350 billion yen worth of “contingent liabilities” from Sharp on Wednesday.

Contingent liabilities are costs that a company might face in the future, based on the outcome of lawsuits, accounting changes, supply contracts or other uncertainties.

Last month it was reported that Apple manufacturer Foxconn had bid $5.3 billion to acquire Japanese display maker Sharp, who has faced numerous financial and manufacturing difficulties over recent years. Now, Japanese news outlet Nikkei Asian Review reports that Sharp has accepted an offer from Taiwan’s Hon Hai Precision Industry, better known as Foxconn, for $6.2 billion.

It was initially reported last year that Foxconn was looking to acquire Sharp with an investment from Apple. That rumored deal proposed that Foxconn would hold a majority stake in the company, while Apple would be on the board as an investor. It’s unclear at this point if the deal Sharp accepted from Foxconn included an investment from Apple or not.

Sharp had faced a choice between Hon Hai’s takeover bid and support from the Innovation Network Corp. of Japan, a state-backed fund. The fund offered Sharp a 300 billion yen injection as well as a 200 billion yen credit line.

With Foxconn having now acquired Sharp, the company is put in a position where it can start to actually make iPhone components, going beyond its current role of assembling the devices.

Sharp’s Kameyama Plant No. 1 in Japan is solely dedicated to producing iPhone displays. Apple initially invested $987 million to transform the plant from an HDTV panel plant to a smartphone LCD factory.

Whether Apple is involved in the deal or not, it’s good news for the Cupertino company. iPhone displays are currently manufactured by Sharp, Samsung, and LG, with Foxconn handling the assembly process. For Apple’s part, it should no longer have to worry about one of its iPhone manufacturing partners going out of business and being unable to fulfill orders.

Apple has reportedly been beefing up its role in the display industry recently. The company reportedly opened a secret production laboratory in northern Taiwan last year to work on developing thinner and brighter displays. Should Apple play a role in the Foxconn acquisition of Sharp, it will gain access to a variety of new talent and resources. Even if Foxconn is the only player in the deal, Apple has such a strong relationship with the manufacturer that it will surely benefit from the deal.

We should know more about Apple’s role in the deal when Sharp and Foxconn officially release details. Until then, it’s unclear how big of a role Apple played in the acquisition process.

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About the Author

Chance Miller

Chance is an editor for the entire 9to5 network and covers the latest Apple news for 9to5Mac.

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