TOKYO Feb 6 Fujitsu Ltd and Panasonic
Corp will merge their chip units in the next fiscal
year, sources said, in the latest example of Japanese firms
combining struggling units to compete with the likes of South
Korea's Samsung Electronics Co Ltd..
The two companies will announce on Thursday after a meeting
of Fujitsu's board of directors that they will begin discussions
on forming a joint venture, three sources familiar with the
matter told Reuters.
Fujitsu is likely to negotiate to take a majority stake in
the venture, which will be a design and development-only firm,
one of the sources said. The two are in talks with Development
Bank of Japan over funding for the venture, sources said.
Fujitsu and Panasonic could not immediately be reached for
comment outside regular Japanese business hours.
Fujitsu and Panasonic's LSI chip businesses, which produce
highly-customised microchips used in a range of consumer
electronics including TVs and digital cameras, have fallen far
behind aggressive South Korean rivals.
The troubles of Japan's once thriving semiconductor industry
were highlighted when Elpida Memory Inc, the
country's last remaining dynamic random access memory (DRAM)
maker, was driven into bankruptcy last February with more than
$5 billion in debt.
Elpida's troubles were followed by the Japanese government's
$1.8 billion bailout of Renesas Electronics Corp, a
leading maker of microcontroller chips used in cars.
Renesas, itself a product of the chip divisions of Hitachi
Ltd, Mitsubishi Electric Corp and NEC Corp
, was also slated to join the new venture. The company
will remain in talks to spin off its LSI business with the two
other firms, the sources said.
Fujitsu and Panasonic will not specify their plans for the
production of LSI chips on Thursday, but the firms have been in
talks with the world's largest contract chipmaker, Taiwan
Semiconductor Manufacturing Co Ltd (TSMC), sources
Fujitsu is also due to report its third-quarter results on