Incorporated: 1935 as Hayakawa Metal Industrial Laboratory
NAIC: 33431 Audio and Video Equipment Manufactur- ing; 33421
SIC: 3651 Household Audio & Video Equipment; 3661 Telephone & Telegraph Apparatus; 3578 Calculating & Accounting Equipment; 3579 Office Machines Nec; 3631 Household Cooking Equipment
Sharp Corporation develops, produces, and markets advanced consumer electronics, business products, and electronic components. For most of the 1980s Sharp's reputation--and sales--lagged behind those of arch-rival Sony Corporation. In the 1990s, though, Sharp emerged as the leader of the liquid crystal display (LCD) industry. LCD panels are lighter and thinner than the cathode ray tube screens common in televisions, and have revolutionized calculators, computer screens, video recorders, and hand-held devices. However, Sharp is more than an LCD manufacturer. The company also does a brisk business in integrated circuits, digital copiers, fax machines, and household appliances. Although 65 percent of its sales are generated in Japan, Sharp has subsidiaries around the world.
The company was founded as a small metal works in Osaka in 1912 by an inventor and tinkerer named Tokuji Hayakawa. After three years in business, earning a modest income from gadgets and repair jobs, Hayakawa engineered a mechanical pencil he called the 'Ever-Sharp.' Consisting of a retractable graphite lead in a metal rod, the Ever-Sharp pencil won patents in Japan and the United States. Demand for this simple and durable instrument was immense. To facilitate greater production, Hayakawa first adopted an assembly line and later moved to a larger factory.
Hayakawa's business, as well as his personal life, were dealt a devastating blow on September 1, 1923. On that day, the Great Kanto Earthquake caused a fire which destroyed his factory and took the lives of his wife and children. Hayakawa endured severe depression, and it was a year before he reestablished his factory. The Hayakawa Metal Industrial Laboratory, as the company was called, resumed production of the Ever-Sharp pencil, but Hayakawa became interested in manufacturing a new product: radios.
The first crystal radio sets were imported into Japan from the United States in the early 1920s. Hearing one for the first time, Hayakawa immediately became convinced of its potential. With little understanding of radios, or even electricity, he set out to develop Japan's first domestically produced crystal radio. After only three months of study and experimentation, Hayakawa succeeded in receiving a signal from the broadcasting service which had begun programming--to a very small audience--only a few months before, in 1925.
The radio entered mass production shortly afterward, and sold so well that facilities had to be expanded. Crystal radios, however, are passive receivers whose range is limited. Hayakawa felt that powered radios, capable of amplifying signals, should be the subject of further development. While competitors continued to develop better crystal sets, Hayakawa began work on an AC vacuum tube model. When the company introduced a commercial model, the Sharp Dyne, in 1929, Sharp was firmly established as Japan's leading radio manufacturer. The company expanded greatly in the following years, necessitating its reorganization into a corporation in 1935.
The laboratory, for all its success, was not a leader in a wide range of technologies; it led only in a narrow section of the market. In addition, the company did not have the benefit of financial backing from the zaibatsu conglomerates or the government. In the realm of the national modernization effort, it was an outsider. This may have been its saving grace, however, as the government had become dominated by a group of right-wing imperialists within the military. Whatever their political opinions, the leaders of Japan's largest corporations were compelled to cooperate with the militarists in their quest to establish Japanese supremacy in Asia. Hayakawa, on the other hand, was for the most part left alone.
During World War II, though, Hayakawa and his company were forced to produce devices for the military, and even to restructure, as new industrial laws intended to concentrate industrial capacity were passed. Renamed Hayakawa Electrical Industries in 1942, the company emerged from the war damaged but not destroyed. While other industrialists were purged from public life for their support of the militarists, Hayakawa was permitted to remain in business. His biggest concerns were rebuilding his company and surviving Japan's postwar recession.
By 1950 more than 80 of Hayakawa's competitors were bankrupt. But Hayakawa's officials personally guaranteed the company's liabilities when the company suffered a critical drop in sales, and Hayakawa Electric was able to obtain the cooperation of underwriters until the first major expansion in the Japanese economy occurred in 1952.
Hayakawa considered television, a field that had not yet proved commercially successful, a highly promising new area. The company began development of an experimental TV set in 1951, even before plans had been made to begin broadcasting in Japan. Two years later, when television broadcasting started, Hayakawa Electric introduced its first commercial television set under the brand name 'Sharp,' in honor of the pencil. Hayakawa's good timing was essential in allowing the company to establish and maintain a significant and profitable market share.
The company started development of a color television in the mid-1950s. In 1960, with the advent of color broadcasting in Japan, Hayakawa introduced a line of color sets. This was followed in 1962 by a commercial microwave oven, and in 1964 by a desktop calculator. The Compet calculator was the first in the world to use transistors. In 1966 the microwave oven received a rotating plate and calculators shrank with the use of integrated circuits.
Hayakawa recognized the great sales potential of the United States; a sales subsidiary was established there in 1962. It served the dual purpose of facilitating sales and observing the market. By the late 1960s, the Sharp brand name had become well-established in North America. Sales in the United States provided the company with a large and increasing portion of its income. In addition, subsidiaries were established in West Germany in 1968 and Britain in 1969.
Hayakawa Electric made two major breakthroughs in 1969. That year the company introduced the Extra Large Scale Integration Calculator, a device now reduced to the size of a paperback book. The other new product was the gallium arsenide light-emitting diode (LED)--in effect, a tiny computer light. Like the radio and television before them, improved versions of both the calculator and LED were subsequently introduced in future years.
Tokuji Hayakawa retired from the day-to-day operations of his company in 1970, assuming the title of chairman. He was replaced as president by Akira Saeki, a former executive director. Saeki oversaw an important reorganization of the company intended to establish a new corporate identity and unify product development efforts. That year, Hayakawa Electric Industries also adopted its new name: Sharp Corporation.
Saeki, who witnessed the Apollo moon landing while in the United States, decided that the company's future efforts should center on the development of semiconductors, the electronic components that had made the lunar mission possible. He initiated construction of a massive research complex called the Advanced Development and Planning Center. The project was a significant investment for Sharp, since its budget was already seriously strained by the construction of an exhibit for Expo '70. Nevertheless construction was begun on a 55-acre research complex in Tenri, Nara Prefecture. When completed, the research complex cost ¥7.5 billion, representing about 70 percent of Sharp's capitalization.
Perhaps the most important product to come out of the Tenri research facility was the Very Large Scale Integration (VLSI) factory automation system. Building upon existing integration technologies, VLSI production lines enabled manufacturers to reduce defects and raise productivity through the use of industrial robots and other mechanical apparatus.
During the 1970s, Sharp consolidated its position in consumer goods by broadening its product line to include refrigerators, washers, portable stereos, copiers, desktop computers, video equipment, and Walkman-type headsets. Perhaps Sharp's most significant development during this period occurred in 1973, when the company introduced the first hand-held calculator using a liquid crystal display (LCD) screen. LCD screens had been discovered in 1963 at RCA Labs, but the American company had been largely uninterested in the discovery. Having just pioneered cathode ray tubes in color, RCA did not see any use for LCD screens. Sharp, on the other hand, incorporated LCD screens into its calculator, making it smaller and lighter. Although Sharp's LCD screen did not seem like a tremendous breakthrough at the time, the technology would later prove central to Sharp's development.
In an effort to head off impending protectionist trade legislation, Sharp built new factories in its largest overseas markets, principally the United States. The company's decision to build a plant in Memphis, Tennessee, was criticized at first. RCA had closed a plant in Memphis in 1966, favoring production in Taiwan. Sharp maintained that RCA had merely suffered from inept management and went ahead with the plant. By pushing its American suppliers for parts with zero defects and incorporating the Japanese concept of full worker involvement, the Memphis plant proved highly successful.
President Saeki retired in 1986, continuing to serve the company as an advisor. He was succeeded by Haruo Tsuji, a 'numbers man' with an exemplary record in middle and upper management. During Saeki's tenure, Sharp had diversified into a wide range of consumer products. By 1986 Sharp operated 12 research laboratories and 34 plants in 27 countries and its employees were equally divided between Japan and foreign countries. The logistics of running a truly international corporation took a toll on Sharp's earnings, however, particularly as the value of the Japanese yen strengthened against other currencies in the mid-1980s. In 1986, for example, Sharp's earnings plunged 42 percent to ¥20.78 billion ($137.5 million). Nevertheless, Saeki had left his company, with its 18 divisions, poised for a future of vigorous growth.
Eschewing the more glamorous development paths of rivals such as Sony and Matsushita, who expanded by acquiring a number of Hollywood-based entertainment companies during the 1980s, Sharp instead focused on research and development. In consumer electronics and appliances, the company engaged in a measured effort to move upmarket, introducing more expensive, but higher quality, products. By the late 1980s Sharp had developed a number of innovations in its product line such as a video disc player capable of reproducing three-dimensional images, a cordless telephone with a 100-meter range, and Zarus, a highly successful computerized personal organizer, capable of reading handwritten Japanese text.
But the most significant changes took place in another area of business. New president Tsuji quickly recognized the potential of LCD devices, and unflinchingly focused the company's resources on developing the technology. Tsuji committed 10 percent of Sharp's total sales revenues to research and development. With this push, Sharp soon began to add LCD screens to all its products. By the late 1980s, Sharp succeeded in producing a thin film transistor LCD--a display with impressively sharp definition that opened the door to color laptop computers and portable televisions.
In 1989, Tsuji appointed Kiyoshi Sakashita, a company board member and an expert in industrial design, to lead a team of 50 engineers focused on further exploiting Sharp's LCD technology. Three years and countless brainstorming sessions later, the company unveiled ViewCam, an ingeniously redesigned video camcorder that presented the image on a four-inch LCD screen as it was being recorded. First shown at Japan's prestigious consumer electronics show in Osaka, Sharp's ViewCam 'set the industry abuzz,' according to the Far Eastern Economic Review. The ViewCam represented a direct challenge to Sony's best-selling Handycam. Within two years, over 1.6 million ViewCam units were sold, at an average price of ¥223,000 ($2,275).
Sharp's LCD advances propelled the company forward. Between 1991 and 1994, Sharp's LCD business grew by more than 35 percent each year, and by the close of fiscal 1994, LCD screens accounted for over 30 percent of Sharp's total revenue. While rivals Sony and Matsushita watched their profits drop in 1994, Sharp's earnings rose by 25 percent over the same period.
The company did not rest on its laurels, however, as it remained committed to development. In the early 1990s Sharp completed two new research and development centers: the Makuhari Building in Tokyo, which focused on multimedia, networking, and software for advanced information systems; and Sharp Laboratories of Europe Ltd. in Oxford, United Kingdom, which focused on areas such as pan-European translation technology and opto-electronics. In 1992 alone, the company spent over ¥100 billion ($660 million) on research and development. Sharp also fortified its television manufacturing operations in the United States, Spain, Thailand, and Malaysia, and shifted some of its other production facilities abroad as well. Late in 1994, for example, the company transferred LCD front-end manufacturing facilities to its plant in Camas, Washington. A few months later, Sharp established an LCD production facility in Wuxi, China. During this period, the company also entered into key relationships with Intel Corporation and Apple Computer, Inc. to jointly develop flash memory chips and personal information equipment. In 1994 Tsuji announced that the company would invest $1 billion over three years to build the world's largest LCD plant. By mid-1994, Far Eastern Economic Review announced that Sharp was 'poised to usurp Sony as the electronics maker to watch in the 1990s--provided it can keep churning out good products.'
As its chief competitors struggled to catch up with its advances, Sharp continued to pin its future on LCD technology. In 1995 Sharp announced that it would again increase capital investments in its electronic devices division. In particular, the company planned to pour funds into its LCD and semiconductor manufacturing operations. Sharp's goal was not merely to produce LCD screens. Rather, the company sought to place cutting-edge LCD technology at the core of the emerging multimedia field. Sharp launched a bevy of products to further this agenda, including the Mebius notebook computer, the Super High-Resolution LCD Projector, and the pen-operated infrared transmission LCD Office Station. At the same time, Sharp entered into an alliance with AT & T to jointly develop the next generation of videophone technology. 'In the 21st century, I envision the future will be involved with three important things--multimedia, semi-conductors, and LCDs,' Tsuji told the New Jersey Business News on January 1, 1996.
The economic climate of the late 1990s confronted Sharp with new challenges, however. Starting in 1996, Sharp--like other Japanese electronic companies--saw its sales eroded by the high value of the yen (which made Japanese products more expensive). 'The production cost in Japan has become the highest in the world,' Tsuji complained to the Wall Street Journal. In response, Sharp shifted more of its manufacturing overseas.
As LCD technology continued to go mainstream, the prices the displays commanded began to decline sharply, falling more than 50 percent in 1996 alone. Nevertheless, Sharp continued to boost production. The company also announced that it would produce and sell notebook personal computers in the United States to complement the company's burgeoning sales of copiers to American customers. Thanks to decisions such as these, Sharp appeared to be unscathed by the strong yen and the slumping LCD prices, even as many of its competitors went through painful restructurings. Early in 1997, Tsuji announced that Sharp would increase its production of LCDs by 43.8 percent for the year and would continue to invest heavily in LCD research and development.
But 1997 inaugurated a more difficult period. Sharp's LCD products faced tremendous competition from Matsushita Electric Industrial Co., as well as from manufacturers in Korea and the United States. The competition drove down prices and raised the supply of LCDs. To top if off, Sharp had failed 'to develop new high margin products that could guarantee it a steady stream of profits,' according to the Asian Wall Street Journal. As a result, the company's profits and sales declined for the first time in five years.
Sharp's troubles only grew more intense with the onset of a severe Japanese recession in 1998 (the country's worst since World War II). Sales of Sharp's usually steady 'white goods' sector (appliances such as refrigerators, washing machines, and air conditioners) plummeted as Japanese consumers shied away from major purchases. Caught in this crunch, Sharp's profits fell another 43 percent in 1998.
In response to the crisis, Tsuji stepped aside and was replaced by Katsuhiko Machida as president. Describing the situation as 'the worst in the history of Sharp,' Machida instituted a number of changes to right the foundering company. In August 1998 he announced that Sharp would entirely replace its production of cathode ray tube (CRT) televisions by 2005. In their place, the company would introduce sets using LCD screens--thereby driving demand for the displays in which Sharp specialized. In 1999, Machida also brought sweeping changes to Sharp's production and management systems. According to Industry Week, Machida sped up Sharp's decision-making process and allocated more responsibilities to his three deputies. More importantly, he freed the company's numerous subsidiaries, appointing local executives to key positions. In 1999, for instance, he made an American (the first ever) the head of Sharp's U.S. subsidiary. Machida also cut costs--especially in the company's flailing semiconductor segment--and reduced Sharp's product lines.
Sharp recognized that it would have to wait out Japan's economic turmoil for its fortunes to recover completely. But the company also continued to develop new products in the hopes of finding its next 'hit.' In 2000 Sharp once again boosted capital investments, the bulk of which went to increased production of LCD panels. Sharp also planned to devise a device that combined the functions of television with personal computers. In 2001 Sharp began plans to manufacture next-generation LCDs--low-temperature, liquid continuous-grain silicon display systems that incorporated semiconductor chips. Sharp also looked to strengthen its position in other areas. In 2000, for example, Sharp teamed up with Xerox Corporation to develop next-generation ink jet printers and copiers. With strategies such as these, Sharp appeared well-positioned to confront the challenges and seize the opportunities presented by the new century.
Principal Subsidiaries
Sharp Electronics Corporation (U.S.A.); Sharp Manufacturing Company of America; Sharp Microelectronics Technology Inc. (U.S.A.); Hycom Inc. (U.S.A.); Sharp Electronics of Canada Ltd.; Sharp Electronics (Europe) GmbH (West Germany); Sharp Electronics (Svenska) AB (Sweden); Sharp Electronics (U.K.) Ltd.; Sharp Precision Manufacturing (U.K.) Ltd.; Sharp Electronics GmbH (Austria); Sharp Electronics (Schweiz) AG (Switzerland); Sharp Electronica Espana S.A.; Sharp Corporation of Australia Pty. Ltd.; Sharp Manufacturing France S.A.; Sharp-Roxy Sales (Singapore) Pte. Ltd.; Sharp Electronics (Singapore) Pte. Ltd.; Sharp Electronics (Taiwan) Company Ltd.; Sharp Appliances (Thailand) Ltd.; Sharp-Roxy (Hong Kong), Ltd., Sharp Thebnakorn (Thailand) Co. Ltd. (STLC), Sharp-Roxy Electronics Corporation (M) Sdn. Bhd. (Malaysia), Sharp Laboratories of Europe (England) Ltd.
Principal Competitors
Samsung Electronics Co., Ltd.; Seiko Epson Corporation; Toshiba Corporation; Sony Corporation; Hitachi, Ltd.; Matsushita Electric Industrial Co., Ltd.
Further Reading
Eisenstodt, Gale, 'Unidentical Twins,' Forbes, July 5, 1993, p. 42.
Friedland, Jonathan, 'Sharp's Edge: Prowess in LCD Screens Puts It Ahead of Sony,' Far Eastern Economic Review, July 28, 1994, p. 74.
Gross, Neil, 'Sharp's Long-Range Gamble on Its Innovation Machine,' Business Week, April 29, 1991, pp. 84-85.
Hamilton, David, 'Sharp's Edge Dull, Leaving Shares Adrift,' Asian Wall Street Journal, September 17, 1997.
Morris, Kathleen, 'The Town Watcher,' Financial World, July 19, 1994, pp. 42-45.
Prior, James, 'Sharp Pioneers Society's 21st Century Products,' New Jersey Business News, January 1, 1996.
Teresko, John, 'Japan: Reengineering vs. Tradition,' Industry Week, September 5, 1994, pp. 62-70.
— Updates: Maura Troester, Rebecca Stanfel
