The two companies started a partnership in March that aims to develop touch-screen technology.
Reuters reports that Foxconn will build a new plant in China and it will produce iPhone touchscreens based on technologies provided by Sharp.
In March, Hon Hai, the company that holds Foxconn, bought nearly half of a Sharp factory in Japan, plus an 11% stake of the entire company in a transaction worth $808 million.
Besides this partnership, Foxconn bought a 46.48 % stake in Sharp’s liquid crystal manufacturing plant in Sakai, Japan, the most advanced in the nation.
Market watchers believe that Foxconn’s deal with Sharp is meant to increase the two companies’ roles among Apple’s suppliers.
The partnership also raised speculation that the two companies could be collaborating on the production of IGZO displays for a rumored Apple television.