Foxconn's Hon Hai Precision Industry Co. has set up a new research center devoted to display and touch technologies in Japan that could end up hiring staff away from Sharp.

The new center, called Foxconn Japan RD Co., represents a major investment for Hon Hai and aims to recruit top talent from the country, the company said in Friday statement. The center will work in tandem with the company's existing R&D resources in China and Taiwan to further improve its screen technology.

The initial facility will be based in the Japanese cities of Sakai and New Yokohama, but Hon Hai could expand the research center to other areas in the future. Leading the center is Kouzoh Yano, who's been listed as a general manager with Sharp, and an expert in LCD technology, according to Hon Hai. It's unclear if Yano is still employed with Sharp.

The research center will be crucial in forming Hon Hai's strategy to connect different devices under a cloud service, the company added. Technology developed from the center will be used in consumer and commercial products, and possibly in healthcare instruments. The panels will range from small-scale displays for smartphones up to 60-inch monitors for TVs.

Hon Hai made the announcement after it failed to secure a deal to become a major shareholder of Sharp.

The Taiwanese manufacturing giant, which is best known for building Apple's iPhone, wants greater access to Sharp's leading display technologies to compete with Samsung, according to analysts. In return, Sharp would have received a major investment at a time when the company continues to struggle financially. Last year, the company announced it would cut 2,000 jobs.

A possible deal may have stalled between the companies, but Hon Hai continues to show interest in tapping Japan's technology base, said Annabelle Hsu, an analyst with IDC.

"Japan leads in screen technology, and so the company wants to hire people in Japan," Hsu said, adding that Hon Hai has been weak in R&D in the past. "This could be a good opportunity for them."

Hon Hai's research center in Japan will be partially based in Sakai, where Sharp's major LCD plant is also located.

IDG News Correspondent Jay Alabaster contributed to this report.