TOKYO (AFP) - South Korean electronics giant Samsung is set to buy a three-percent stake in struggling Japanese rival Sharp via a capital increase, a press report said on Tuesday, a deal that would give Samsung greater access to smartphone and tablet computer screens.
The Japanese economic newspaper Nikkei said in its online edition that Sharp would sell Samsung new shares worth around 10 billion yen (S$134 million), and use the funds it earned to bolster its bottom line.
An official announcement was expected on Wednesday, Nikkei said.
Sharp has suffered from stiff competition in the market for liquid crystal screens that has pushed prices lower, and would now provide such products made at its plant in Kameyama, central Japan, to Samsung on priority.
The plant currently ships many of its screens to Samsung's arch rival Apple, and the agreement should allow Samsung to avoid having to invest massively in new production capacity.
According to Nikkei, the two companies could explore cooperation in other areas as well.
Sharp expects to close its fiscal year with a net loss of 450 billion yen, and has been searching for industrial and financial partners.
In March 2012, Sharp signed an accord with the Taiwanese group Hon Hai, also known by its commercial name of Foxconn, that would see the latter acquire a 9.9 per cent stake in Sharp for 550 yen per share.