By Maki Shiraki and Daniel Leussink

TOKYO (Reuters) - Nissan is open to working with new partners after merger talks with Honda foundered, two people familiar with its thinking said on Thursday, with Taiwan's Foxconn seen as one candidate.

The struggling Japanese automaker is again at a crossroads after backing out of negotiations with bigger rival Honda to create the world's No. 3 automaker, a deal that would have been the latest major change in the shifting global car industry.

Nissan CEO Makoto Uchida met with Honda counterpart Toshihiro Mibe earlier on Thursday to say he wanted to end the discussions after Honda proposed making Nissan a subsidiary, according to a third person, who had knowledge of the matter.

All three people declined to be identified because of the sensitivity of the topic.

Nissan is now open to working with new partners, including technology companies, as it looks to navigate the technological upheaval brought by electric vehicles, software-driven cars and new, fast-moving Chinese manufacturers, the two people familiar with its thinking said.

It was also open to working with Taiwan's Foxconn, the world's largest contract electronics maker, one of them said.

Foxconn, which manufactures Apple's iPhones and has been seeking to expand its nascent EV contract manufacturing business, approached Nissan about a bid but was rejected by the carmaker, Reuters reported in December.

Foxconn's EV business is led by a former Nissan senior executive, Jun Seki, who was once seen as a contender to become the automaker's CEO, before the job went to current boss Uchida.

Nissan and Honda spokespeople declined to comment on the status of their talks, repeating earlier statements that they aimed to finalise a future direction by mid-February. Foxconn did not immediately respond to a request for comment.

GROWING DIFFERENCES

Honda and Nissan in December signed a memorandum of understanding to discuss an integration under a holding company.

But the talks have been complicated by growing differences, multiple people familiar with the matter have told Reuters, and hit a wall after Honda said it wanted to turn Nissan into a subsidiary. 

A consensus was reached on Nissan's side that the talks could not proceed under that proposal, said the person with knowledge of the matter.

Nissan will formalise the decision to withdraw from the MOU at a board meeting to be held before the company's third-quarter earnings announcement next week, the person added.

Honda's current stance is that it would not accept an integration unless Nissan agrees to become a subsidiary, Japanese public broadcaster NHK reported.

Honda is Japan's second-largest carmaker behind Toyota, and Nissan is the third-largest.

A scrapping of the discussions raises questions about how Nissan, which is in the middle of a turnaround plan, can ride out its latest crisis without external help. Nissan has already announced plans to cut 9,000 workers and 20% of global capacity.

Nissan's shares rose 7.3% on Thursday while Honda's fell 4%, reversing the direction of their respective moves a day earlier.

(Reporting by Maki Shiraki and Daniel Leussink; Additional reporting by Kaori Kaneko; Writing by Chang-Ran Kim and David Dolan; Editing by Jamie Freed and Mark Potter)