Japan's Sharp Corp said it plans to dedicate more than 70 percent of output at one of its liquid-crystal display (LCD) panel plants to small panels for smartphones and tablets, a move the Nikkei newspaper says is expected to boost the company's 2011/2012 earnings.
The company appears to have received a new order for Apple Inc's iPad, the Nikkei said, without citing sources.
The gradual shift in emphasis from large panels is expected to help improve earnings in the current year, although the electronics maker will likely make a net loss for April-June, the paper said.
The company reported an operating profit of 78.8 billion yen in the year to March 2011.
Sharp is set to give earnings guidance for the current year at a news conference on Friday, at which it would also discuss its LCD business.
The consensus is for an operating profit of 56.8 billion yen for the current year, based on estimates by 30 analysts polled by Thomson Reuters I/B/E/S.
The company has said it will convert part of its Kameyama No. 2 facility to make small panels there this year and refit its Kameyama No. 1 plant for the same purpose.
That would eventually result in more than 70 percent of output going to small and medium-sized panels, a Sharp spokeswoman said on Thursday.
The Nikkei said production of small panels at the No. 1 plant would start in 2012.
In April, Sharp denied a report that Toshiba Corp had been chosen to produce small panels for Apple and that Sharp had been dropped as a supplier.
The Kameyama facility was once a mainstay of the company's LCD TV business, but was being increasingly seen as redundant in the face of competition from manufacturers in South Korea, Taiwan and elsewhere.
The declining price of LCD TVs has dented Sharp's earnings, but it will likely see benefits from the shift into the smartphone and tablet computer markets, the paper said.
Sharp will continue to make TV-use LCD panels at its state-of-the-art Sakai plant, and will also procure more low-cost TV panels from other parts of Asia, the Nikkei said.
Shares of Sharp were down 1.5 percent at 736 yen in morning trade, roughly in line with the Nikkei benchmark index.
(Reporting by Isabel Reynolds and James Topham in Tokyo, Arpita Mukherjee in Bangalore; Editing by Vinu Pilakkott)