NEC, Casio and Hitachi are to merge their handset manufacturing operations to create Japan’s second-biggest phone-maker.
NEC, Japan’s third-biggest handset firm, will dominate the new company, which will be called NEC Casio Mobile Communications when it sets up in April 2010.
The merged company will have sales of 505 billion yen ($5.5 billion) and would deliver synergies in sales, procurement and customer service and unify “technological assets, know-how and resources,” the companies said in a statement.
The new company will have 5 billion yen ($55 million) in capital, with NEC holding 70.1% of the stock, Casio 20% and Hitachi 9%.
The senior partner in the deal, NEC makes phones for NTT DoCoMo and SoftBank Mobile. It stresses its expertise in W-CDMA and LTE wireless, Linux platforms, low power consumption and ultra-thin technologies.
Under the merger terms, Casio and Hitachi will tip their five-year-old handset JV into the new company. Casio Hitachi’s sales of CDMA phones to companies such as KDDI, LG Telecom and Verizon have been flat for the last three years. It made a loss of 12.5 billion yen ($137 million) this year.
The merger is an overdue step towards consolidation of Japan’s over-supplied handset market, particularly since operators began cutting handset subsidies two years ago.