Samsung May Buy Sharp Stake

TOKYO--Sharp Corp. (6753.TO) and Samsung Electronics Co. (005930.SE) are in talks for the South Korean technology giant to invest about 10 billion yen ($108 million) in the embattled Japanese firm, people familiar with the matter said Wednesday.

Under the deal, Sharp may issue new shares to Samsung later this month and Samsung may become a key customer for Sharp's liquid crystal display panels, the people said.

The investment from Samsung would come as Sharp--a big supplier to Apple Inc. (AAPL)--scrambles to raise funds and secure customers for its liquid crystal displays in an ongoing effort to prove to its bank lenders that its business prospects remain solid.

Sharp shares rose 16% in early Tokyo trade after Japanese media reports that the two companies had agreed to a deal.

If completed, the deal would mark a historic shift in the balance of power in the electronics industry. While Japanese firms once dominated, Samsung's emergence as a manufacturing and technological force has reshaped the landscape.

Sharp's decision to turn to Samsung--once its most feared rival in LCD panels and televisions--signals the desperate situation facing Sharp. It needs capital injections to secure its balance sheet after a planned Y66.9 billion investment from Taiwan's Hon Hai Precision Industry Co. (2317.TW) fell through last year when Sharp's business prospects and share price worsened.

Write to Juro Osawa at [e-mail] and Min-Jeong Lee at [e-mail]

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