UPDATE 1-Sharp jumps on talk of deals with Samsung, Chimei

Reuters | February 4, 2011 | Reiji Murai
* Sharp needs to raise production at LCD panel plant
* Chimei deal would involve mutual panel supply
* Sharp’s shares rise after the news (Recasts, adds share price move)
TOKYO, Feb 4 (Reuters) – Shares in Japan‘s Sharp Corp (6753.T) jumped on Friday after an industry source told Reuters it is negotiating liquid-crystal display panel supply deals with Samsung Electronics (005930.KS) of South Korea and  Taiwan‘s Chimei Innolux (3481.TW).
Sharp expects to reach an agreement soon to supply Samsung with large panels, said the source, who declined to be identified.
Sharp, the world’s fifth-largest producer of large LCD panels, is also negotiating to provide Chimei with large panels for TV use in return for a supply of mid-sized panels from the Taiwanese firm, the source said.
Shares in Sharp touched a high of 888 yen, up nearly 5 percent, following the news. Markets in Taiwan and South Korea were closed for the Lunar New Year holiday.
The Nikkei business daily said earlier Sharp and Chimei, a unit of Taiwan’s Hon Hai Precision Industry (2317.TW), had formed a supply tie-up that would help Sharp cope with the effects of the strong yen, which is squeezing Japanese exporters’ profits.
Sharp, which announced on Thursday it had almost tripled profits in the nine months to December form the same period a year earlier, aims to raise production rates at its state-of-the-art panel factory in Sakai, western Japan.
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