Japanese electronics major Sharp Corporation is planning to spin off its core small and medium-sized liquid crystal display panel business.

The struggling electronics maker is planning to ask a government-backed investment fund of around 100 billion yen to help finance the spinoff.

Sources close to the matter said on Sunday said the Osaka based company has already sounded out Innovation Network Corporation of Japan, an investment fund set up with government- and private-sector funding, about the possible investment.

It has also been told that the company has set up an internal team to spin off the business and the plans it made for a new medium-term management plan which is to be unveiled in May.

The sources said Sharp’s main lenders have apparently given their approval to the move. The manufacturer's Kameyama plant in Kameyama, Mie Prefecture, is expected to be transferred to the new group company, they said.

The company is looking forward to sign a deal with Innovation Network Corporation that would give the government-backed fund a slightly more than 40% stake in the subsidiary.

But the sources said there is also another plan to have the fund instead invest in Sharp itself.

Innovation Network Corporation, which is supervised by the Ministry of Economy, Trade and Industry, has invested in Japan Display Inc.

Japan Display Inc was created in 2012 through a merger between the display units of Sony Corp., Toshiba Corp. and Hitachi Ltd.

As per experts, the latest move would raise the possibility that Sharp and Japan Display may join hands to compete with rival South Korean and Chinese LCD makers.

Sharp that is presently struggling to remain profitable in its LCD panel business faces tough completion as Japan Display business has intensified from the latter half of 2014.