Sharp's stock jumped 5% on Friday after a local media report said the Japanese display maker was in negotiations to make Intel its biggest shareholder.
The sources said the talks are focused on sealing a business alliance, although they did not rule out the possibility of Intel acquiring a stake in Sharp in the future.
The jewel in Sharp's technology portfolio is the IGZO display. It consumes much less power than conventional LCD displays, is thinner as it requires less back lighting, has a highly-sensitive touch screen, and boasts very high definition.
Intel is promoting ultra-thin laptops, known as ultrabooks, to counter tablet computers from Apple Inc. Earlier this year, the U.S. chipmaker signed deals with several panel makers to ensure adequate supplies for a wave of ultrabooks with touch screens expected to hit the market following Microsoft Corp's launch of Windows 8 in late October.
Sharp is expected to complete it's revival plan within days to present to the banks, which will decide to provide about 200 billion yen in additional loans, the sources said. The plan includes the sale of its U.S. solar power unit Recurrent Energy bought in 2010.