The Sharp Corp logo is seen at the company's showroom in Tokyo
Sharp Corp. said Qualcomm will become a minority shareholder. Reuters

Sharp Corp. (TYO:6753), the ailing Japanese electronics maker, said Qualcomm (NASDAQ:QCOM), the No. 1 U.S. mobile chip developer, agreed to invest as much as 9.9 billion yen (US $121 million), in the company.

The goal is to ensure a steady flow of LCD chips for mobile platforms like smartphones and tablets. Qualcomm, of San Diego, has been selling its Snapdragon chip line to scores of Asian manufacturers, headed by China's Lenovo Group (PINK:LNVGY) for use in new products.

The Qualcomm deal comes about nine months after Apple's (NASDAQ:AAPL) principal contractor, Taiwan's Hon Hai Precision Industries (TPE:2317), agreed on a similar investment but then never closed the deal.

Sharp, one of Japan's top chipmakers as well as a leader in displays, has been battered by competition from Korean manufacturers. It's projected its full-year loss should widen to 450 billion yen from 369 billion yen for the year ended March 31.

Qualcomm said it was interested in Sharp display technology called Igzo, which consumes less power and offers higher resolution. It will also share technology expertise with Pixtronix, of Andover, Mass., which Qualcomm acquired this year for its PerfectLight display technology that's suited for multimedia.

Qualcomm, which reported cash and investments exceeding $26.8 billion as of Sept. 30, also committed to buying at least half its stake in Sharp this month, with the rest in March, which could leave it with a 5 percent stake.

Previously, industry experts in Japan speculated Sharp might reach out to Dell Inc. (NASDAQ:DELL), the No. 3 PC maker, for investment.

Shares of Sharp rose 1 percent to 174 yen in Tuesday trading, while those of Qualcomm fell 23 cents to $63.14 in early trading. They've gained about 17 percent in 2012.