Fujitsu and Toshiba are in the final stages of negotiations to merge their mobile phone businesses, The Nikkei reports without naming its sources. The firms are likely to set up a joint venture later this year to combine their handset operations, creating the second-largest Japanese phone maker after industry leader Sharp. Fujitsu is expected to hold a majority stake. Fujitsu manufactures handsets for NTT DoCoMo, while Toshiba mainly supplies phones to KDDI. Since ending handset production in Japan in fiscal 2009, Toshiba has been relying on overseas subcontractors to make them. Nevertheless, the company's phone operations suffered losses last fiscal year. Fujitsu managed to post a profit, but remains vulnerable to the growing cost of developing increasingly sophisticated devices, the paper said. Growing competition has promopted consolidation on the Japanese market, with NEC, Casio and Hitachi already merging their mobile phone operations in the past year. In fiscal 2009, Fujitsu was the No. 3 Japanese phone maker, shipping 5.18 million handsets domestically. Toshiba ranked eighth, with its domestic shipments reaching 1.26 million units. Their combined market share came to 18.7 percent. Sharp outpaced all rivals with a 26.2 percent share. Reuters and the Wall Street Journal also reported the merger talks, citing unnamed sources familiar with the matter.
