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UPDATE 1-Japan's Renesas to sell display chip business to Synaptics -sources

* Renesas SP Driver is chip supplier for Apple iPhone screens

* Apple was in talks on purchase but failed to make progress

* Renesas selling non-core assets, focusing on auto sector

(Adds company comments, source comment on likely timing of decision)

TOKYO, May 28 (Reuters) - Renesas Electronics Corp plans to sell its majority stake in a maker of iPhone display chips to Synaptics Inc, another smartphone chip supplier, according to sources familiar with the matter.

Apple Inc had also been in talks about a possible purchase of the stake in Renesas SP Driver in what was seen as a potential move to shore up its global supply chain, but the sources said those talks failed to make progress and Renesas had narrowed its consideration to Synaptics.

The sources could not be named because they were not authorized to speak to media about the matter.

A Renesas spokesman said the company was considering various options for the unit, including a sale, although no decisions had been made. Synaptics declined to comment.

The news was first reported in the Nikkei business daily's digital edition.

One source said it could take several weeks to reach a formal decision on the sale, given the various stakeholders involved.

Renesas has been looking to sell its 55 percent stake in the unit that is the sole supplier of display driver chips for Apple's iPhone, as it focuses on customers in the auto sector and sheds non-core assets.

Display maker Sharp Corp, which holds 25 percent of Renesas SP Driver and is unloading assets to bolster its finances, is also expected to sell its stake once Renesas reaches an agreement.

Taiwan's Powerchip holds the remaining 20 percent.

Renesas shares rose as much as 4.2 percent to 770 yen on Wednesday, a two-week high, compared with a flat Tokyo benchmark Nikkei average. The chipmaker, which is restructuring after it was taken over by a state-backed fund, has more than tripled in value since April of last year.

(Additional reporting by Sophie Knight; Writing by Edmund Klamann; Editing by David Goodman)

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