Cash-strapped Japanese electronics giant Sharp said Tuesday it had struck a capital injection deal with US-based chipmaker Qualcomm as it moves to repair its tattered balance sheet.
Sharp, mired in heavy losses, has reportedly been talking with other US technology giants about a possible investment (AFP/File, Yoshikazu Tsuno)
The 9.9 billion yen ($121 million) investment follows earlier reports that Sharp, which is suffering heavy losses, has also been talking to other US tech giants, including Intel and Dell, about a possible investment.
The Qualcomm deal would see the pair jointly develop energy-efficient liquid crystal display (LCD) panels for smartphones using the Japanese firm's technology, with the US company initially getting about 2.64 percent of Sharp's stock, based on 4.9 billion yen worth of shares.
The remainder of the investment would be paid as the joint venture progresses, Sharp said.
Sharp shares got a boost from earlier reports of the Qualcomm deal, with the embattled stock rising 1.16 percent to 174 yen in Tokyo on Tuesday.
"We positioned mid-sized and small LCD panels as our growth engine as we are competitive in that technology," Sharp said in a statement.
"The market for smartphones and tablets, the target for the mid-sized and small LCD panels, are expected to require higher picture quality and energy-efficiency as the market expands," it added.
Sharp has suffered a series of credit rating downgrades and warned it expects to lose about $5.6 billion in the fiscal year to March 2013.
The Osaka-based maker of Aquos brand electronics has announced thousands of job losses while cutting wages for employees -- from the factory floor to the executive boardroom -- and selling real-estate to shore up its balance sheet.
Earlier this year, Sharp said it had reached a capital injection deal worth about $800 million with Taiwan's Hon Hai Precision, which makes Apple gadgets in China, but the deal stalled as Sharp's share price nosedived.
Japan's battered electronics sector has suffered from a myriad of problems including a high yen, slowing demand in key export markets, fierce overseas competition and strategic mistakes that left its finances in ruins.