Sharp Corp <6753.T> will announce a tie-up with Taiwan's Hon Hai Precision Industry <2317.TW> on Tuesday that would include the sale of part of its loss-making major factory in western Japan, the Nikkei business daily reported.

Sharp, Japan's biggest maker of liquid crystal displays, is battling a slump in television demand that has forced it to slash output at its main plant in Sakai, western Japan, which is working at half of its capacity.

Sharp said earlier its incoming President Takashi Okuda would hold a briefing about a strategic business tie-up in Tokyo at 5 p.m. (0800 GMT). Hon Hai confirmed it had an upcoming deal with Sharp but declined to provide details.

The Nikkei said Sharp would either sell shares in a subsidiary that runs the Sakai plant, or part of the factory's equipment, to Hon Hai.

Sharp President Mikio Katayama, who will make way for Okuda on April 1, has previously said Sharp would work with overseas companies to cut costs.

Together with Sony Corp <6758.T> and Panasonic Corp <6752.T>, Japan's three main TV makers expect to lose $17 billion this year, savaged by competition from foreign rivals led by South Korea's Samsung Electronics <005930.KS>.

Sharp has projected a record 290 billion yen ($3.50 billion)net loss in the year ending March 31 as it struggles with a slump in LCD demand. It has trimmed its forecast for LCD TV sales to 12.8 million from 13.5 million.

Sales of LCD TVs almost halved in the October-December quarter, and only sales of TV models with screens 60 inches or bigger in the United States remained robust.

($1=82.83 yen)

(Reporting by Reiji Murai, Nobuhiro Kubo)

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