The companies had been expected to conclude an agreement for Hon Hai to buy a 9.9 percent stake in Sharp during a visit to Japan by Hon Hai's chairman, Terry Gou, in August. Gou left early without seeing Sharp executives and the meeting has yet to be rescheduled.

"There has been no development regarding capital from their side," a Sharp executive said at a briefing on Friday in Osaka on condition he was not identified.

Gou, who returned to Taiwan, said in Taipei he would only buy a stake in Sharp if it agreed to give him a say in its business strategy.

Sharp, which is scrambling to raise funds to pay its debts, has indicated it wants to discuss further cooperation with Hon Hai, including in its small liquid crystal display business, after the two companies have agreed to the investment.

BANK HELP

Sharp's banks are assuming no agreement will be made soon. Its main lenders Mizuho Financial Group Inc and Mitsubishi UFJ Financial Group Inc are aiming to arrange financing of as much as 300 billion yen ($3.87 billion) by as early as September 20, sources at the banks told Reuters last week. Hon Hai's expected capital injection has not been factored in.

To secure their backing, Sharp, which has as much as 360 billion yen of short-term commercial paper, has already mortgaged nearly all of its domestic offices and factories, including one which makes screens for Apple Inc's latest iPhone.

On Tuesday, the maker of Aquos TVs said it will trim salaries of its managers by a tenth for a year and seek an across-the-board wage cut for other workers as the cash-strapped TV maker looks for fresh ways to save money. Those cuts are in addition to plans to slash 5,000 jobs, or about a tenth of its global workforce.

Sharp's stock was 1 percent lower in afternoon trading in Tokyo compared with a 2 percent gain in the benchmark Topix index.

($1 = 77.4400 Japanese yen)

(Reporting by Yoshiyuki Osada; Writing by Tim Kelly; Editing by Ryan Woo)

• A Permanent Economic Emergency