Foxconn founder Terry Gou said there would have to be layoffs at Sharp to turn around the ailing Japanese company, but pledged that wages would rise and profit-sharing would again be the norm.

“Unfortunately, a close review of the company’s operations makes it clear that the level of inefficiency throughout Sharp means that a turnaround ... can only take place if there is a reduction in costs, and that comes with a very regrettable need to reduce Sharp’s workforce,” Mr Gou wrote in an open letter, seen by Reuters, to Sharp staff late on Thursday.

Sharp earlier reported its annual losses trebled from a year earlier.

Taiwan’s Foxconn, the world’s largest contract electronics manufacturer, has battled to seal a $3.5 billion deal to give it a two-thirds stake in Sharp as the Japanese display maker seeks a return to profit in the face of slowing smartphone sales.

The letter said staff cuts would be carried out “responsibly and sensitively,” but didn’t provide figures. A person familiar with the matter said cuts could total 3,000 in Japan, and more when Sharp’s global operations are included.

– Reuters