Japanese electronics firm Sharp has warned that it might not be able to keep going as a company, a situation that could put pressure on supply of iPhone 5s.
Sharp's consumer electronics division is dragging it down and growth in its components business won't be enough to save it on its own, financial results show.
"As operating and net loss for the six months ended September 30, 2012 were huge, continuing from the previous year, cash flows from operating activities were negative," the firm said in its financial statement. "Therefore, Sharp is in circumstances in which material doubt about its assumed going concern is found."
Sales of camera modules for smartphones and tablets and sales of LCD screens, including those for the iPhone, were both up, but a drastic fall in TV sales drove the firm to a net loss of a whopping ¥387.5bn (£2.9bn, $4.8bn), considerably worse than the situation at at the same time last year, when it lost ¥39.8bn (£307m, $497m).
The company is now expecting to lose ¥450bn (£3.5bn,$5.6bn) in the full year, a lot more than the ¥250bn (£1.9bn, $3.1bn) it forecast earlier this year.
Sharp has already been restructuring like mad to try to recover a strong position in the electronics market and got its banks to agree to a ¥360bn (£2.9bn, $4.6bn) bailout deal as well. But it said it would make even deeper cuts into its business to survive after these results.
"We will restructure business further… generating cash flows by decreasing expenses including personnel expenses such as calling for voluntary retirement and cutting salaries, setting proper inventories, selling assets and reducing capital investments," Sharp said.
"As a result, we will secure the necessary credit line, supported by financial institutions, and attempt to improve business performance and regain trust by monitoring the progress of this plan and implementing it steadily."
The once-mighty giants of Japanese electronics, Sharp, Panasonic and Sony, have taken blow after blow since the global financial crisis hit. Belt-tightening consumers don't want to fork out for new tellies, the strong yen is hitting exports and they face renewed competition from more nimble Korean firms like LG and Samsung. On top of all that, they have failed to make an impact in the new global revenue stream from mobile devices. ®