Hon Hai, the Taiwanese contract electronics manufacturer, is to become the largest shareholder in Sharp of Japan as part of an $805m deal that underscores the shifting centre of power in Asia’s consumer electronics industry.

Sharp said yesterday it had agreed to sell a 10 per cent stake in itself to Hon Hai, producer of everything from Apple iPods to Sony PlayStation video game consoles, for Y67bn ($806m) and to share control of a large but underused TV display factory that Sharp owns in western Japan. The deal comes two weeks after Mikio Katayama, Sharp’s president, resigned over the poor performance of its mainstay TV business. The company is forecasting a Y290bn net loss in the financial year ending March 31, the worst deficit since its founding a century ago.

Like other Japanese electronics companies, Sharp has invested heavily in production facilities for liquid crystal displays, only to be undercut by cheaper Taiwanese and South Korean producers.