Japan's Sharp And Taiwan's Hon Hai In Talks About LCD Alliance: Sources

TOKYO -- Japan's Sharp Corp. is in talks with Taiwan's Hon Hai Precision Industry Co. Ltd. for a tie-up in its struggling flat-panel display business, according to two sources familiar with the discussion. Under the proposed plan, Sharp would spin off the display business into a separate unit ahead of investment by Hon Hai and possible cash injections by other entities, including the state-directed Innovation Network Corporation of Japan, the sources said.

The talks come after Sharp's CEO, Kozo Takahashi, said last month he was open to major restructuring of Sharp's liquid-crystal display (LCD) and consumer-electronics businesses as analysts and investors clamored for an overhaul.

Similar tie-up talks between Sharp and Hon Hai fell through in 2012 after the Japanese company balked at demands that it said would have given the Taiwanese firm too much control. Nonetheless, the two companies remained in contact and jointly operate an plant in Osaka that makes large LCD panels.

(Reporting by Reiji Murai; Writing by Tim Kelly; Editing by Nick Macfie)