South Korean consumer electronics maker Samsung is in talks to acquire a stake in troubled Japanese company Sharp, according to people familiar with the deal.

Samsung is said to invest 10 billion yen (US$107 million) for a three per cent stake in Sharp.

“Ten billion yen is too small to meet Sharp’s needs but it does send a positive signal to the market. This means the giant electronics maker feels confident in Sharp,” said Ace Securities analysts Hideki Yasuda.

While Samsung and Sharp declined to comment, the deal involves an agreement that Sharp will supply Samsung with LCD panels for TVs and smartphones. The Japanese company has been supplying LCD panels for Samsung’s 32-inch TVs.

The Japanese company has held talks with Foxconn of Taiwan to raise capital, however, the deal did not come into fruition. In December, it received an investment of 10 billion yen from US semiconductor maker Qualcomm.

Sharp expects to record a loss of 450 billion yen in the year to March 31.