The deal gives Siward a 16.6 per cent stake in Rakon and a spot on the Auckland company's board.
As well as reducing its debt, Rakon managing director Brent Robinson says the new investment would allow both companies to form a strategic partnership.
"Siward's manufacturing scale and expertise is a perfect complement to Rakon's leading-edge technology," Robinson said.
"This partnership will give both companies a broader range of products and alternative channels into new and existing markets," he said.
Siward President Tseng Jung Meng says the company was excited by the "potential opportunities a strategic partnership with Rakon will generate".
"This investment will allow us to explore new opportunities, which we believe will generate significant benefits for Siward over time," Tseng said.
The news comes at the end of a difficult year for Rakon, in which it shares have slumped by 31 per cent.
Investors in September also dumped Rakon executive director Darren Robinson from the board in a rare case of successful shareholder activism.
Rakon last month posted a net loss of $5.7 million in the six months to September.
Revenue slumped 21 per cent to $46m, and underlying earnings before interest, tax, depreciation and amortisation plunged 90 per cent to $647,000.
