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Hon Hai asks for joint ownership of Sharp's small LCD-media

TOKYO, Oct 6 (Reuters) - Taiwan's Hon Hai Precision Industry Co is asking Sharp Corp to turn the Japanese company's small and mid-sized liquid crystal display panel business into a joint venture between the two, Yomiuri newspaper reported on Saturday.

Sharp is also in separate talks to raise money by issuing convertible bonds to Intel Corp and aims to reach an agreement by the end of the month, the paper said.

Hon Hai, headed by Chairman Terry Gou, has been expected to play a critical role in the revival of the struggling Japanese TV maker with business and financial assistance, bu t ta lks between the companies for a much-needed cash infusion have stalled for weeks.

Hon Hai's demand for Sharp to spin off and sell part of its small- and mid-sized LCD business is likely to further muddy the waters as the Japanese firm is hesitant to cede part of its core business seen as a key to its revival, the newspaper said, without citing sources.

Sharp officials were not immediately available for comment on the Yomiuri report.

Gou has bought a 46.5 percent stake in Sharp's Sakai plant, which produces large-sized LCD panels. Unlike commoditised TV displays, Sharp hopes it can still claim an advantage in small LCD panels, which are used for smart phones and tablets.

Reuters recently reported Sharp is in talks to supply liquid crystal display panels for ultra-thin laptops that typically use processors made by Intel, with sources hinting at the possibility of future capital infusion by the U.S. chipmaker.

Hit hard by rapid decline in TV sales due to fierce competition from rivals like Samsung Electronics , Sharp is attempting a turnaround, with backup from main lenders Mizuho Financial Group and Mitsubishi UFJ Financial Group .

Uncertainty over Sharp's revival efforts grew after its share prices plunged earlier this year, prompting Hon Hai to seek a revision of the terms of a March agreement for it to buy a 10 percent stake in Sharp for 67 billion yen ($851 million).

($1 = 78.6950 Japanese yen)

(Reporting by Taiga Uranaka; Editing by Sanjeev Miglani)

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Keywords: SHARP HON HAI/