Samsung to buy three per cent stake in Sharp

South Korean firm Samsung is to buy a three per cent stake in its Japanese rival Sharp for 10.4bn yen (£73m).

Sharp has been struggling to restructure its operations as it continues to make losses; the firm has forecast its biggest ever loss for the fiscal year ending March 31, of 450bn yen.

Last year, Sharp conceded that there was doubt about whether it could remain in business.

But the news of an investment from the top smartphone maker could ensure that it will survive to provide TV panels and continue to produce Apple's iPhone and iPad screens.

It currently provides Samsung with LCD panels, and through the agreement Sharp said it would "continuously provide a long-term, stable and timely supply of LCD panels for large-size TVs and small- and medium-size LCD panels for mobile devices such as notebook computers".

Once the deal has gone through, Samsung will be the fifth leading foreign shareholder of the Japanese firm, alongside semiconductor maker Qualcomm, which agreed to invest 10bn yen (£79m) in December.

Sharp is one of many Japanese firms that are in decline, alongside the likes of Panasonic and Sony, all of which provide TV sets but are being squeezed by Samsung in overseas markets. Falling demand for Sharp's high-tech panels and the increase in strength of the yen have led the firm onto a downwards spiral.

Like Sony, Sharp's credit rating was cut to "junk" status last year, making it harder for the company to raise money.

Earlier in the day, reports suggesting that Samsung was going to make an investment led to shares in Sharp jumping as much as 17 per cent to a high of 350 yen on the Tokyo Exchange, before closing yesterday at 341 yen - a jump of 14.05 per cent.