Japanese electronic company Sharp has published its annual operating strategy for 2012, stating that it will cooperate with Taiwan's Hon Hai in 2013 for its entry into the Chinese smartphone market.

Sharp said that production scale has become the decisive factor in LCD TV and mobile phone industries. To achieve success in these sectors, a company must have an overwhelming scale of production. The current digital product industry is no longer an industry depending only on technology. Therefore, Sharp has decided to form an alliance with Hon Hai, who has large production and procurement capacities. Based on the cooperation, the Japanese company is expected to realize business expansion in the digital product sector by business restructuring, planning and marketing enhancement, and production risk reduction.

According to Sharp, mobile phone is the first step for its cooperation with Hon Hai. In 2013, the Chinese mobile phone market will increase to about 300 million units, of which half will be smartphones. Targeting the Chinese market, Sharp will flexibly use Hon Hai's procurement capacity and provide competitive products to local carriers.

Apart from mobile phone, the two parties will also cooperate in color TV sector. Hon Hai reportedly advanced its LCD panel purchase from Sharp to the third quarter, instead of fourth quarter of this year.