NEC Corp. is in final talks with Chinese personal computer maker Lenovo Group Ltd. to jointly set up a new mobile phone company, which may accelerate additional restructuring efforts in the Japanese mobile phone industry.
Many domestic firms have been suffering from poor business results in the face of strong competition from abroad.
NEC operates its cell phone business through NEC Casio Mobile Communications Ltd., which it established together with Casio Computer Co. and Hitachi Ltd. in 2010. NEC shouldered 70 per cent of all capital requirements for the deal in an attempt to turn around its business.
Observers believe the latest tie-up is aimed at restructuring NEC's sales division through joint efforts in component procurement and development and production of mobile phones with Lenovo, the largest PC maker in China. The new company is expected to launch sometime from the end of this month.
Lenovo, which has the second-largest share of the Chinese smartphone market, is perceived as wanting to expand its smartphone sales by taking advantage of NEC's technological capabilities, in light of the Chinese firm's slowing PC sales.
NEC and Lenovo first began cooperating in 2011 with the integration of their PC businesses in Japan.
NEC was the largest mobile phone company in Japan by fiscal 2004, but has been suffering from poor business results in recent years, and now has a market share of less than 10 per cent.
Domestic development lagged