Sharp Corp is leaning toward spinning off its LCD business into a joint venture with a third party, rather than selling the unit outright, people familiar with the matter said.
Innovation Network Corp of Japan and Hon Hai Precision Industry Co (鴻海精密) are the two leading candidates Sharp is considering for partnership, according to the people, who asked not to be named because the discussions are private.
The Osaka-based supplier to Apple Inc and the potential partners have not entered any talks over price yet, and there is no guarantee they will be able to reach an agreement for a joint venture, two of them said.
Sharp, which is forecasting its fourth loss in five fiscal years, announced a recovery plan in May, including cutting its workforce by 10 percent and selling preferred shares to banks.
Sharp president Kozo Takahashi is selling the company’s headquarters, withdrawing from the TV business in North America and cutting back in solar, as demand growth slumps in its new mainstay of smartphone displays.
“The clock is ticking for Sharp,” Shinkin Asset Management Co lead fund manager Naoki Fujiwara said. “It has to talk with as many potential partners as possible.”
If Innovation Network injects capital into the joint venture, it might combine the business with Japan Display Inc, according to two of the people.
There could be antitrust concerns in combining two operations.
The company had sought an investment from Hon Hai in 2012, but talks foundered over disagreements on price and the Taipei-based company’s possible role.
Sharp spokesman Yoshifumi Seki said the company is considering various options to restructure its LCD business and has not entered negotiations with any specific company.
Both Hon Hai and Innovation Network declined to comment.