TOKYO (AFP) - Struggling Japanese electronics giant Sharp on Thursday announced it would produce cutting-edge liquid crystal display panels for tablet computers, smartphones and other products in a Chinese joint venture from 2015.
Under the agreement, Sharp will license its prized IGZO and other panel technology to a new factory in the eastern city of Nanjing, which will be built by local manufacturing giant Nanjing China Electronics Panda Group, the Japanese firm said in a statement.
The venture would be 92 per cent owned by the Chinese firm with Sharp holding the remainder.
The panel factory will be run by the joint venture with capital of 278 billion yen (S$3.6 billion), it said, adding that factory construction was to begin in August.
Production will begin in June 2015 and the factory will have the capacity to produce 7.2 million panels for 10-inch tablet computers each month.
Sharp has not disclosed licensing fee details, but the Nikkei business daily previously said it would receive tens of billions of yen for sharing its energy-efficient technology.
"We will use the licensing fees from the planned investment in the venture.
So, we won't be required to set aside cash separately for the project," a Sharp spokeswoman said.
Sharp will also have the right to purchase some of the factory's output, she said, adding that it would be the first time the Japanese company has licensed its IGZO technology to a third party.
The deal would mark a shift from closely guarding its technologies by handling everything from development to production in-house.
Sharp has been going through a massive restructuring programme to rebuild itself, as it continues to suffer huge losses that have threatened its survival.
Along with job and salary cuts, the company has also inked capital tie-up deals with foreign firms including South Korea's Samsung Electronics and US-based Qualcomm.
Sharp shares dropped 4.14 per cent to 370 yen on Thursday in Tokyo.