"Sharp has not been able to fully adapt to the intensifying market competition, which led to significantly lower profits compared to the initial projections for the previous fiscal year, and has been suffering from poor earnings performance," Sharp said in a statement explaining the TV deal.
Sharp has focused on high-end screens to protect profit margins and avoid directly competing with Chinese and South Korean rivals.
But it has struggled to innovate sufficiently to keep commanding significant premiums. In addition to Chinese competitors, it has also faced strong competition from Japan Display in smartphone screens.
The company on Friday said it could not yet determine the financial impact of the Hisense deal. It reiterated its outlook to achieve 80 billion yen ($644.54 million) in operating profit in the current business year.