Innovation Network Corp. of Japan plans to reject Sharp Corp.'s request for an investment because of concern it would face opposition from Apple Inc. and antitrust regulators, according to a person familiar with the matter.

The state-backed fund already supports Japan Display Inc., which competes with Sharp to supply Apple and others, and that may trigger opposition, the person said, asking not to be identified because the talks are private. Sharp wanted INCJ to invest in the potential spinoff of its liquid-crystal display unit, a separate person familiar with the matter said in April.

The two display makers controlled a combined 25 percent of the global market for smaller LCD panels of the kind used in smartphones and tablet computers last year, according to researcher IHS Inc. The prospects of creating a dominant supplier may trigger opposition from regulators, which last month blocked a $9.39 billion deal between Tokyo Electron Ltd. and Applied Materials Inc.

Sharp earlier this month announced plans to pare its workforce 10 percent after reporting a ¥222.4 billion ($1.8 billion) net loss in the year ended March. The Osaka-based maker of Aquos TVs said banks will buy ¥200 billion of preferred stock.

INCJ hasn't reached a final decision on Sharp and its assessment may change in the future, the person said.

Japan Display was created when INCJ's ¥200 billion investment brought together struggling screen units of Toshiba Corp., Sony Corp. and Hitachi Ltd.

A spokeswoman at INCJ in Tokyo declined to comment. She didn't give her name, citing policy. Miyuki Nakayama, a Sharp spokeswoman, didn't immediately respond to a phone call seeking comment.