Sharp Corp. has decided to close its Tenri plant in Nara Prefecture to help reorganize its money-losing liquid crystal display business, a move it hopes will boost efficiency and competitiveness, sources close to the matter said on Sunday.
The decision comes as the company struggles with shrinking demand from China.
The ailing electronics maker is on the verge of accepting a rescue plan proposed by Taiwan's Hon Hai Precision Industry Co., but is also working on structural reforms on its own.
The Tenri plant, which began operations in 1991 and has been producing smartphone display panels, will close at the end of August due to aging equipment, according to the sources.
The roughly 130 workers at the factory will be transferred to other plants including the Kameyama plant in Mie Prefecture.
The Tenri facility will remain a key development hub for advanced technologies, including organic electroluminescence displays, the sources said.
The company will also halt one of the two production lines at another plant in Mie that produces smartphones for the Chinese market and move part of the operations to the Kameyama plant as scheduled.
With the company forecasting an operating loss in its LCD business of ¥30 billion ($266 million) for fiscal 2015 through March, Sharp urgently needs to turn around its earnings.
The struggling company also plans to invest ¥11.2 billion in its Kameyama plant to shore up its midsize panel operations.