UPDATE 1-Sharp plan to sell Nanjing plant to Hon Hai on hold -source

Wed Dec 26, 2012 9:25pm EST

TOKYO/TAIPEI Dec 27 (Reuters) - Struggling Japanese TV maker Sharp Corp's plan to sell its Nanjing plant in China to Taiwan's Hon Hai Precision Industry Co Ltd has been frozen and may not materialise, a source familiar with the matter said on Thursday.

Sharp, which supplies screens to Apple Inc for its latest iPhone, considers selling its Mexican plant to Hon Hai to be more important, and talks to sell the Nanjing plant, which assembles large-size liquid crystal display TVs, may take time, said the source, who was not authorised to speak to the media.

Both Sharp and Hon Hai declined to comment.

Earlier this month, Sharp struck a deal with Qualcomm Inc for the U.S. chipmaker to invest as much as $120 million to help the Japanese firm stay afloat, and to jointly develop new power-saving screens.

That deal has helped soften banks' stance towards Sharp, allowing it to make stronger demands of Hon Hai, said a source at one of Sharp's suppliers.

Sharp had been expected to make Hon Hai its biggest shareholder, adding to an earlier agreement to sell the Taiwanese company a stake in its advanced television LCD panel in Sakai, western Japan.

That agreement has stalled as Sharp's losses have mounted, and its executives remain opposed to giving Hon Hai managerial say.

Shares in Sharp were down 1.9 percent against a 1.3 percent rise in Tokyo's electric machinery index.