Sharp has confirmed that Foxconn has withdrawn from plans to acquire one of its key LCD manufacturing plants in Japan, citing prolonged weakness in global LCD panel prices.

The Japanese electronics company said the sale of the plant to its Taiwanese majority owner had collapsed after Foxconn reassessed the commercial outlook.

The plant primarily produces small and medium-sized LCD panels used in smartphones and tablets.

As a result, Sharp will halt production at the facility in August and offer voluntary retirement to 1,170 employees.

The company expects to record restructuring costs of around ¥10 billion (A$100 million) as extraordinary losses in the financial year ending March 2026, followed by an additional ¥2 billion the year after.

Foxconn, best known as Apple’s main iPhone manufacturing partner, had originally planned to maintain LCD production at the site while also installing new manufacturing lines for AI servers.

While the acquisition is no longer going ahead, Foxconn is still considering using a separate, currently idle building at the Kameyama site to manufacture AI servers.

Sharp president and CEO Masahiro Okitsu (pictured) downplayed any tensions, saying that relations with Foxconn “have not deteriorated in any way”.

In a further blow to its restructuring plans, Sharp also announced it has scrapped a separate proposal to transfer large-panel LCD technology to an Indian company.

That initiative had been designed to redeploy staff affected by the closure of Sharp’s Sakai plant, which ceased production in August 2024.

With that plan abandoned, Sharp will seek voluntary retirement from an additional 240 employees and book a further ¥2.2 billion in extraordinary losses in the current financial year.

The developments highlight the accelerating shift away from traditional LCD manufacturing as panel prices remain under pressure and manufacturers pivot toward higher-growth areas such as AI hardware and advanced computing infrastructure.