Industry have reportedly reached a deal to supply LCD panels to each other to more efficiently compete against Korean rivals Samsung and LG Electronics.
According to a Nihon Keizai Shimbun report, the two companies also plan to work in a joint production venture, with each firm holding a 50 percent stake, to procure key flat-panel components and supplies at better rates.
Hon Hai (also known as Foxconn Technology Group) is the world's largest contract electronics maker and holds a substantial share of leading Taiwan LCD manufacturer Chimei Innolux.
Under the deal, Chimei will sell Sharp LCD panels for TVs measuring 20 inches to 40 inches, which it is equipped to more cost-effectively manufacture than Sharp. Sharp, in turn, will sell Hon Hai LCD panels measuring 60 inches and larger which are produced at its advanced large-panel LCD fabs.
Meanwhile, the new joint venture company will procure LCD panel components, including glass substrates and color filters for flat-panel use, when it begins operation by the end of the year, the report stated.
The joint venture partnership is expected to leverage the companies' combined massive buying power to command better prices and help cut materials and component costs while advancing production technology.
Under a previous deal, Sharp had been sharing technology with Chimei Innolux to produce more energy-efficient panels with picture quality levels meeting Sharp's standards.
A recent DisplaySearch report showed combined share of Sharp and Chimei Innolux at 24.5 percent of the global large-sized flat-panel market, just behind Samsung.