Shares in Sharp nosedived to a four-decade low after the supplier of screens to Apple and other smartphone makers said it would miss its first-half profit forecasts due to "severe" conditions in the smartphone LCD panel market.

Local media reports, which were described by analysts as “surprising but not incredible”, cited sources who said Sharp’s first-half losses could be as much as 30 times deeper than the market had been expecting.

The heavy tumble in Sharp's shares came in spite of intensifying speculation that the company was a step closer to selling a controlling stake in its display business to Taiwan's Foxconn.

For several months Foxconn has led a list of likely candidates to invest in Sharp, as the struggling Japanese group attempts to spin off some businesses.

– (Copyright The Financial Times Limited 2015)