Apple Inc (AAPL.O) is in talks to buy Japan-based Renesas Electronics Corp's stake in a unit that designs liquid crystal display chips for iPhones for about 50 billion yen, the Nikkei reported, without identifying a source.
Renesas owns 55 percent stake in Renesas SP Drivers, its joint venture with Sharp Corp and Taiwan's Powerchip.
Apple expects to complete the stake purchase by summer, the business daily reported on Tuesday.
The U.S. company "apparently wants to meld" the design of core display components into its overall product development as image quality becomes a crucial selling point for smartphones, the Nikkei said.
Sharp, which owns 25 percent in Renesas SP, is expected to sell its stake to Apple if the U.S. company asks, the newspaper said.
Renesas has been hit by slowing orders and competition from companies such as Samsung Electronics Co Ltd.
The Japanese company received a 150 billion yen bailout from a government-led fund and its major customers in September to counter an earlier bid by U.S. private equity firm KKR & Co LP (KKR.N).
(Reporting by Sruthi Ramakrishnan in Bangalore; Editing by Kirti Pandey)