Hon Hai Precision Industry Tuesday said it was in talks with Sharp Corp about buying a bigger stake in the struggling Japanese TV maker and paying less per share as part of a renegotiated investment deal between the two Apple Inc suppliers.

Sharp's deteriorating earnings outlook has battered its share price and allowed Hon Hai to squeeze Japan's TV pioneer for a better deal than the one agreed in March, under which it would buy around 10 percent of Sharp for US$844 million, or 550 yen per share. Sharp closed at 183 yen yesterday.

"Without Hon Hai's money, Sharp is in danger of bankruptcy," said Pelham Smithers, managing director of a London-based market research firm of the same name. "It's just a matter of what terms Hon Hai is able to extract."

At Sharp's current market value, Hon Hai's planned investment could buy it a third of the Japanese firm's stock.

"A bigger stake and price cut are both being discussed, but we need to do it step by step," Hon Hai spokesman Simon Hsing said. "We first need to work on a joint statement to tell investors whether we need to honor the original obligation."

The two companies will issue a joint statement later this week, he added.

Hon Hai last Friday said Sharp had released it from the terms of the original, but Sharp on Monday insisted the deal stood.

Hon Hai in talks to buy bigger Sharp stake