(Corrects paragraph 2 to show that Spansion will be using a Fujitsu plant, not buying it)
TOKYO, April 30 Japan's Fujitsu Ltd is in late-stage talks to sell its microcontroller chip business to Spansion Inc -- a deal that will broaden the U.S. semiconductor company product line-up so it can better cater to automotive clients, two sources familiar with the matter told Reuters on Tuesday.
Terms of the deal, which will include Fujitsu's microcontroller design and development business, could not be obtained. Production of the chips looks set to continue at a Fujitsu plant, the sources said.
Microcontrollers, chips used widely in cars, are seen as a high growth area and Spansion, a joint venture set up in 2003 between Fujitsu and Advanced Micro Devices Inc that specialises in flash memory, has been trying to diversify its product range.
While semiconductors were once a key business for Fujitsu, it and other Japanese chipmakers have failed to keep up with rivals like Samsung Electronics Co Ltd. Fujitsu also plans to merge its LSI chip business with that of Panasonic Corp this fiscal year.
A Fujitsu spokesman said nothing had been decided with regards to its microcontroller chip business. The news was also reported by Japanese media, including the Nikkei business daily.
Microcontrollers are part of Fujitsu's device solutions business, which also includes LSI chips. The division logged 585 billion yen ($6 billion) in sales in the year ended March 2012, accounting for 12 percent of Fujitsu's total revenue.
Japan's Renesas, the world's leading maker of microcontroller chips, secured a $1.8 billion government-led bailout last year after slashing jobs and deciding to close eight out of its 18 domestic plants. ($1 = 98.1500 Japanese yen) (Reporting by Maki Shiraki; Writing by Mari Saito; Editing by Edwina Gibbs)