* Hon Hai, Sharp to issue statement this week - Hon Hai spokesman
* Sharp shares up 1.1 pct on Tuesday
* Talks over renegotiating March investment deal
* Sharp's woes unlikely to dent Apple supply chain - analysts
By Clare Jim and Tim Kelly
TAIPEI/TOKYO, Aug 7 (Reuters) - Taiwan's Hon Hai Precision Industry said it was in talks with Sharp Corp about buying a bigger stake in the struggling Japanese TV maker and paying less per share as part of a renegotiated investment deal between the two Apple Inc suppliers.
Sharp's deteriorating earnings outlook has battered its share price and allowed Hon Hai to squeeze Japan's TV pioneer for a better deal than the one agreed in March, under which it would buy around a tenth of Sharp for $844 million, or 550 yen per share. On Tuesday, Sharp closed at 183 yen.
"Without Hon Hai's money, Sharp is in danger of bankruptcy," said Pelham Smithers, managing director of a London-based market research firm of the same name. "It's just a matter of what terms Hon Hai is able to extract."
At Sharp's current market value, Hon Hai's planned investment could buy it a third of the Japanese firm's stock.
"A bigger stake and price cut are both being discussed, but we need to do it step by step," Hon Hai spokesman Simon Hsing told Reuters on Tuesday. "We first need to work on a joint statement to tell investors whether we need to honour the original obligation."
The two companies will issue a joint statement later this week, he added. Hon Hai on Friday said Sharp had released it from the terms of the original, but Sharp on Monday insisted the deal stood. Sharp declined to comment on Tuesday.
Analysts have said Sharp will likely have to accept less money from Hon Hai or sell a bigger stake to the Taiwanese firm, ceding more management control that could see TV assembly plants closed and solar panel and appliance units sold off.
Barclays Capital analyst Kirk Yang has predicted Hon Hai would buy around a 10 percent stake in Sharp, but at a renegotiated price of 200-300 yen per share.
Battered by foreign competition and waning demand for its TVs, and too few customers to buy its LCD panels, Sharp's shares have slumped 73 percent this year and the cost of insuring its debt against potential default has soared. The company's bonds, too, are under pressure, with debt maturing in 2013 last quoted at below 63 cents in the dollar.
Sharp, which pioneered LCD televisions and invented the electronic calculator, is relying for backing on its main banks, Mizuho Financial Group and Mitsubishi UFJ Financial Group. A source at one of Sharp's main banks told Reuters those lenders may insist on closer ties with Hon Hai and the sale of non-LCD businesses to raise cash in return for help.
Those assets include some 40 billion yen ($511.25 million) in marketable stocks, such as a 9.2 percent stake in rival Pioneer and shares in medical device maker Olympus Corp , Toshiba Corp and banks.
The century-old company last week warned it would report a 100 billion yen ($1.28 billion) operating loss this fiscal year, prompting ratings agencies to cut their credit ratings. It said it will axe 5,000 jobs, about a tenth of its global workforce and its first redundancies in six decades.
Sharp's woes are unlikely to squeeze Apple's supply chain as it gears up for the launch of its latest iPhone expected in October. Analysts say Apple has the clout to secure alternative suppliers.
"What they supply to Apple can be found elsewhere. It's not unique proprietary technology," said Shaw Wu at Sterne Agee in San Francisco.
Sharp, which makes screens for the iPad and other Apple gadgets, plans this month to begin shipping screens from its Kameyama plant that are widely known to be for the new iPhone.
Sharp's competitors - South Korea's LG Display and Japan Display Inc - a government-brokered merger combining parts of Toshiba, Sony Corp and Hitachi Ltd - also provide displays for iPhones.