Fujitsu and Toshiba: not in talks on chip tie-up

TOKYO (Reuters) - Japan's Fujitsu Ltd (6702.T) and Toshiba Corp (6502.T) said on Wednesday they were not in talks about a capital tie-up to develop and produce microchips, as reported by a Japanese newspaper.

Fujitsu shares ended the morning up 0.4 percent, outperforming a 2 percent decline in the benchmark Nikkei average .N225, while Toshiba fell 1.9 percent.

"From a practical point of view, it's hard to imagine such an alliance," said Tomomi Yamashita, fund manager at Shinkin Asset Management.

"For Fujitsu shareholders, it could be positive since it would offload the firm's loss-making system chip business. But I cannot see any reason for Toshiba to buy it," he said.

The Yomiuri newspaper reported on Wednesday that the two chipmakers were in talks on an alliance in which Toshiba would likely acquire a majority stake in Fujitsu chip unit Fujitsu Microelectronics.

The paper said the two were likely to work together on developing next-generation chips and building plants.

"We have been thinking of all kinds of partnerships to expand our business, but we are not even considering a capital tie-up like the one described in the report," said Fujitsu spokesman Etsuro Yamada.

In a statement, Toshiba said it was not considering an alliance in its chip business.

Toshiba is the world's No. 2 maker of NAND flash memory chips after Samsung Electronics Co Ltd (005930.KS).

Fujitsu, whose system chips are used in products ranging from digital cameras and flat TVs to supercomputers, has suffered from falling prices and evaporating profits.

The firm made its chip operations a separate entity in March, a move that could smooth the way for alliances with other chip makers.

(Reporting by Mayumi Negishi and Taiga Uranaka; Editing by Hugh Lawson and Chris Gallagher)