Sharp in talks with Foxconn to spin off display business

The plans involve Sharp overhauling the unit with potential investment from other parties.

Sharp and Hon Hai Precision, otherwise known as Foxconn, are reportedly in talks for a tie-up to support Sharp's struggling display business.

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As reported by Reuters, two sources familiar with the matter said the plan would involve Sharp spinning off the display business into a separate unit.

Once this is complete, investment from Foxconn and other possible groups -- such as the Innovation Network Corporation of Japan -- would keep the unit from being drawn asunder.

Last month, Sharp CEO Kozo Takahashi said the executive would consider "a wide range of options" to salvage the business, including gathering external investment or spinning off the unit and handing over dominant control to another party altogether.

The announcement was a sharp turnaround by Takahashi, who previously said Sharp's liquid crystal display (LCD) business would remain fully-owned by the Japanese electronics manufacturer in the future.

According to the WSJ, Takahashi's analysis of "quickly deteriorating market conditions" prompted the change of heart.

Sharp has struggled in recent years to stay afloat due to stiff competition, marker fluctuations and falling sales. The company, which produces consumer electronics, displays, solar panels and appliances, is in the midst of restructuring in an attempt to survive. Thousands of jobs have already been lost and in July, Chinese manufacturer Hisense took over Sharp's television business units in the United States.

Under the terms of the deal, Hisense has paid $23.7 million for the full ownership of equity and assets relating to the Japanese firm's TV production facility in Mexico, and has also secured the rights to use the Sharp name across the US.

This is not the first time Hon Hai and Sharp have conducted talks concerning the display business. In 2012, Sharp stopped discussions with the Taiwanese manufacturer as proposed terms would have given Hon Hai too much control over the business. However, both Sharp and Hon Hai jointly run a display manufacturing plant in Osaka, Japan, in which Hon Hai owns a 38 percent stake.

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