Under the new proposal, Foxconn – an Apple supplier – would take a majority stake in Sharp’s liquid crystal display company, the Nikkei said.

Foxconn has looked to Apple for investment, and talks have been under discussion since summer, but are said to have broken down because of operational demands.

Sharp’s LCD business reported consolidated sales of JPY 907.1 billion and operating profit of JPY 30.1 billion in fiscal 2014 but moved into the red in the April-June quarter, with an operating loss of JPY 13.7 billion.

The fall in price of small- to medium-size displays for smartphones could depress the price tag if negotiations drag on for a long time, the Nikkei added.

EMS-giant Foxconn – or Hon Hai Precision Industry – is looking to get its hand on Sharp’s LCD business, which could prove to be an opportunity the Japanese company to rid riskfilled operations.

Osaka-based Sharp was once a highly profitable manufacturer of premium TVs and a favoured screen supplier to Apple and others, but it has come under heavy pricing pressure from Asian rivals.

Earlier this year, Sharp said it was cutting 10 percent of its 49,000 jobs worldwide as part of a turnaround plan. Apple funded half of Sharp’s JPY 100 billion or so in smartphone-related capital spending in 2012, and its own procurement could be affected by the fate of Sharp’s LCD business.

Apple may look to support Foxconn’s proposal to prevent a merger between the two display companies, as it will reduce its supplier options, and make operational costs inefficient if they are not scaled down.

Hon Hai declined to comment on the report, saying that it does not comment on market speculation.