UPDATE 1-Fujitsu appoints new head to fill leadership void

* Incoming pres says will keep chip operations for now

* Says Fujitsu ahead in restructuring, but some remains (Adds comments from news conference, updates share price)

TOKYO Jan 22 (Reuters) - Fujitsu Ltd (6702.T), Japan's biggest IT services firm, has appointed the head of its system products business as its next president, after months of deadlock that halted restructuring.

Masami Yamamoto, currently a senior vice president, will take the helm of the firm starting in April, Fujitsu said on Friday.

Analysts have said Fujitsu needs to cut costs further if it is keep pace with heavyweights IBM (IBM.N), Hewlett-Packard (HPQ.N) and Dell (DELL.O). Fujitsu, despite efforts to expand abroad in IT outsourcing services, remains tied to a sluggish market in Japan.

"I want to make Fujitsu a truly global IT firm," he told reporters at a news conference, at which he steered clear of details, saying that he had more studying to do first.

Chairman Michiyoshi Mazuka has been running Fujitsu ever since former President Kuniaki Nozoe abruptly stepped down in September, citing illness.

Mazuka's provisional status weakened his ability to cut money-losing operations or pursue mergers to boost sales in IT services, company officials and investment bankers said. [ID:nTOE5BN06M]

The delay may be costly in the rapidly transforming IT services sector, where hardware, software, and services firms are coming together to become more competitive, such as Oracle Corp's (ORCL.O) planned acquisition of Sun Microsystems Inc JAVA.O and HP's deal for network equipment maker 3Com Inc COMS.O.

Yamamoto, 56, began his career at Fujitsu designing a Japanese word processing system and working to expand the company's PC operations overseas. In his current position he is in charge of Fujitsu's server business.

"Fujitsu has been relatively speedy in restructuring, but some still remains," he said. He declined to comment on which operations required restructuring, but said he wanted to keep the company's shrinking chip operations for now.

Fujitsu has been scaling back its chip business, outsourcing development to TSMC (2330.TW). Yamamoto said said it was more important to bring the unit back to profitability before looking for potential partners or buyers.

Shares of Fujitsu ended down 2.2 percent at 578 yen, underperforming a 1.5 percent fall in Tokyo's index of electrical machinery stocks .IELEC.T. (Reporting by Mayumi Negishi; Editing by David Dolan)