Hon Hai Precision Industry Co Ltd (2317.TW), the world's largest contract electronics manufacturer, will partner with flat-panel maker Innolux Corp (3481.TW) in investing T$86.8 billion ($2.8 billion) in a panel-producing plant in Taiwan, the firms said.

The move comes as Hon Hai is trying to diversify aggressively by finding new revenue sources beyond contract assembly for the likes of Apple Inc (AAPL.O). Earlier this year it bought stakes in a Taiwanese mobile network provider and a South Korean IT services provider.

Hon Hai and Innolux, the world's No.3 flat-panel maker, are currently buying equipment for the facility located in the southern port city of Kaohsiung and which is expected to start production in the second half of 2016, an Innolux representative said on Thursday.

The plant, which will make LTPS (low-temperature polysilicon) panels, predominantly for use in smartphones, was originally built in 2008, but was idled due to financial constraints after the 2008 global financial crisis.

It was not immediately clear how the firms would split the investment and the plans are still awaiting final approval from the boards of both companies, though Hon Hai will likely take a proportionately larger stake. The Innolux representative said the investment may take the form of a new joint-venture company.

A Hon Hai representative confirmed the plan. Hon Hai already holds a 9 percent stake in Innolux via investment by its subsidiary companies and founder Terry Gou.