Japan’s Sharp has agreed to be acquired by Taiwan’s Foxconn for about $3.5 billion, concluding months of talks that drove down the price of the largest acquisition by a foreign company in Japan’s tech industry.

Foxconn, the world’s leading electronics contract manufacturer, originally offered nearly $900 million more for a two-thirds stake in Sharp but it backed away following revelations that its target had 350 billion yen worth of potential liabilities.

“We have much that we want to achieve and I am confident that we will unlock Sharp’s true potential and together reach great heights,” Foxconn CEO Terry Gou said in a joint news release.

Foxconn assembles iPhones at factories in mainland China. The components include Sharp screens, and the deal is expected to give Foxconn greater leverage with Apple, which has been giving some production contracts to other assemblers and component makers.

“Foxconn believes acquiring Sharp would allow the company to move up the technology value chain by manufacturing smartphone screens, which are the most expensive components in mobile devices,” The Wall Street Journal said.

Screens cost as much as $54 each and Sharp provides roughly 25% of iPhone displays, according to the research firm IHS.

Even though it got a haircut on the deal, Foxconn is taking on a significant financial risk, analysts told Reuters. Sharp has estimated an operating loss of around 170 billion yen for the fiscal year ending this month, due in part to weaker smartphone panel sales in China.

Apple is expected to adopt a new screen technology known as OLED for the iPhone by 2018 and Kylie Huang, an analyst with Daiwa-Cathay Capital Markets in Taipei, said Samsung Electronics will for some time likely remain the preferred suppliers for those screens.

Foxconn previously took over a Taiwan screen maker, Chimei Innolux, for nearly $10 billion, but analysts say the acquisition has failed to produce the efficiencies and profitability it hoped for.