Fujitsu, Toshiba in talks to merge cellphone units

Tokyo: Fujitsu Ltd and Toshiba Corp are in talks to combine mobile-phone operations and create Japan's second-largest handset producer, two officials at the companies said.

The discussions are preliminary and may not lead to a deal, the officials said, asking not be identified because the talks are private. They denied a Nikkei newspaper report the two Tokyo-based companies were in the final stages of negotiations.

Japan's mobile-phone makers face pressure to consolidate as competitors including Nokia and Samsung Electronics Co. win market share overseas and iPhone-maker Apple Inc. takes customers at home. NEC Corp. merged its phone unit with those of Casio Computer Co. and Hitachi Ltd. earlier this month.

Shares of Tokyo-based Fujitsu rose 0.7 per cent to 559 yen at the Tokyo Stock Exchange on Friday. Toshiba gained 2 per cent, while the benchmark Nikkei 225 Stock Average advanced 1.7 per cent.

Speculation

Fujitsu and Toshiba are likely to set up a venture this year to combine their handset operations, with Fujitsu expected to hold a majority stake, the Nikkei reported yesterday. Both companies denied the report.

Mobile phone shipments in the country fell 12 per cent last year after shrinking 30 per cent in 2008, according the Japan Electronics and Information Technology Industries Association.

Fujitsu accounted for 15 per cent of mobile-phone shipments during the 12 months through March, while Toshiba had 3.7 per cent, according to Tokyo-based MM Research Institute Ltd. Sharp Corp. was the top producer with a 26 per cent share, according to the Tokyo-based research firm's estimates.

While Fujitsu earns profit from handsets, the domestic market is shrinking and sales are falling, said Yuichi Ishida, an analyst at Mizuho Investors Securities Co. in Tokyo. Toshiba's phone unit has been losing money for years and is unlikely to post profit this year.