Philips is picking up the shares at a steep discount to boost its holding to 7.46 percent from 2.46 percent.
The deal signals TCL's joining of a Chinese government programme that threatens to flood the country's equity market with stock. In April, Beijing revived efforts to reduce its stake in publicly traded companies.
Shares in two of TCL's Hong Kong-listed units fell on Wednesday on concerns about the supply of stock on the market.
Under the deal, Philips's China unit will buy 129.32 million shares from TCL's biggest stakeholder, the Huizhou municipal government, TCL said in a statement in the Securities Times.
Philips would pay either 1.58 yuan or 1.87 yuan per share, depending on whether elements of TCL's participation in the government share programme are considered, it said.
Both prices are a steep discount to TCL's last price of 2.34 yuan per share. The stock has been suspended since December 10.
TCL has been distributing Philips-branded TVs in China since 2003. The Chinese company also buys semiconductors from Philips for electronics products such as mobile phones and televisions.
Trading in TCL stock will not resume until shareholders approve the company's plan to convert the state shares into publicly traded stock. The proposal is part of a government programme to float around $250 billion in such holdings.