Once a trusted lieutenant of Foxconn founder Terry Gou, Jeng-wu Tai, the former vice president of Foxconn and ex-CEO of Sharp Corporation, has recently initiated legal proceedings against his former colleague over an unfulfilled incentive contract.
This development raises questions about how these partners, who collaborated for over 40 years in building Foxconn's global empire, have reached this point of legal confrontation.
Industry sources indicate the legal action stems from divergent paths and decisions that ultimately led these former allies to seek resolution through the courts, in what appears to be an attempt to "restore some aspects of the truth."
Prior to this dispute, Tai was entrusted with a crucial mission in Japan to rehabilitate Sharp, which was struggling at the time. He subsequently signed a performance-based reward agreement worth NT$1.2 billion (approx. US$40 million) with Terry Gou, a contract that now stands at the center of their legal dispute.
Sharp's transformation and challenges
In 2016, as Sharp's first non-Japanese CEO, Tai implemented several innovative measures. Within just 15 months, Sharp not only returned to profitability but also achieved re-entry into the Tokyo Stock Exchange's First Section, becoming the second company in Japanese history to successfully transition back from the Second Section.
However, in February 2022, Sharp announced the acquisition of nearly 80% of the shares in a factory in Sakai for JPY40 billion (US$285.7 million), making it a wholly-owned subsidiary.
With the panel industry's condition deteriorating beyond mere grimness, Sharp not only ended its six consecutive years of profit in 2022 but also sustained significant losses, directly impacting Foxconn. Tai, who made this decision as CEO, retired from Sharp in March 2022.
Management decisions under scrutiny
Tai publicly defended his decision, describing the Sakai factory as "Sharp's child" and emphasizing his obligation to support the struggling facility, maintaining his position despite opposition.
However, this reasoning has failed to resonate with industry observers, with the factory repurchase widely regarded as one of the most controversial decisions in Tai's management career.
Leadership commitment
In previous interviews, Tai revealed that his commitment to Sharp's recovery included relocating to Japan alone, residing in employee dormitories, and maintaining a daily ritual of visiting the Sharp shrine before work. His efforts resulted in Sharp's faster-than-expected turnaround and restoration to the Tokyo Stock Exchange, well ahead of the projected two to four-year timeline.
Sources report that Tai declined a salary during his tenure at Sharp, demonstrating a level of dedication that may not be fully appreciated by outside observers.
Complex contractual situation
Industry insiders note that the contract details remain private, making it impossible to verify specific terms regarding payment recipients, methods, or timelines. Consequently, Tai's demand for contract fulfillment from Foxconn and Terry Gou is being processed as a standard labor dispute.
Current leadership dynamics
The situation is complicated by Terry Gou's 2019 transfer of Foxconn's leadership to current chairman Young Liu due to Gou's presidential campaign, raising questions about the responsibility for this financial obligation.
Beyond Young Liu's awareness of the contract, Sharp's financial losses following the Sakai factory repurchase pose additional challenges. It wasn't until 2024 that Young Liu implemented new strategies, including converting the Sakai facility into an AI computing center, reducing manufacturing operations, and emphasizing brand development to stabilize Sharp's position.
Corporate governance considerations
The substantial size of the contract amount presents another hurdle. Foxconn's enhanced operational management mechanisms mean such a significant reward cannot be authorized by Young Liu independently.
Given Sharp's recent financial performance, corporate governance standards would make it difficult for the board to approve such a substantial payment from company earnings.
As the case enters mandatory mediation, the ability of Tai, Gou, and Foxconn to reach a mutually acceptable resolution will determine whether the matter proceeds to formal legal proceedings.
Sources indicate that while NT$1.2 billion represents a significant sum, Tai's primary motivation extends beyond the monetary reward to bringing certain historical matters to light.
In response, Foxconn has affirmed its commitment to operating within legal and compliance frameworks, handling all matters in accordance with the law.
Article translated by Joseph Chen
