Lenovo in smartphone joint venture talks

Japanese media reports that mainland giant is looking to tie up in sector with PC partner NEC

PUBLISHED : Tuesday, 04 June, 2013, 10:45am
UPDATED : Thursday, 29 August, 2013, 4:13am

Lenovo, the world's second-largest supplier of personal computers, admitted yesterday it was in talks to establish a joint venture in the smartphone business.

The official announcement yesterday gave no name for the potential joint-venture partner but came after reports online and in the Japanese media that said Lenovo was looking for a smartphone tie-up with NEC, which is already its partner in a personal computer joint venture in Japan.

In a filing with the Hong Kong stock exchange, Lenovo said it was "in preliminary discussions with a party in connection with a potential joint-venture transaction.

"As at the date of this announcement, no material terms concerning the potential transaction have been agreed," the computer giant said. It provided no further details.

Speculation had been rife in March that Lenovo was negotiating with NEC to buy the Japanese company's struggling handset subsidiary, NEC Casio Mobile Communications.

NEC had reportedly started discussions with Lenovo about selling the handset business to it last year.

Alberto Moel, a senior analyst at Bernstein Research, said: "These discussions make sense, but I'm not sure that Lenovo would get much out of such an acquisition. The only possible reason that may be of interest to Lenovo would be to acquire the talent in NEC's handset business, which is a minor player that only sells in Japan."

NEC Casio Mobile was established in May 2010 as a joint venture between three Japanese electronics manufacturers - NEC, Casio and Hitachi. NEC owns a 70.74 per cent stake in the venture, which sells smartphones in Japan under the NEC and Casio brands.

Lenovo, which does business in more than 160 countries, currently sells its own-brand smartphones in China, Russia, Vietnam, the Philippines, Indonesia and India.

The company, which expects to expand its handset sales into North America, Europe and emerging markets, sold about 30 million smartphones in its financial year ended March.

Bernstein Research said Lenovo was the mainland's No 2 smartphone brand last quarter, with a 10.2 per cent market share, behind Samsung on 17.7 per cent and slightly ahead of Huawei Technologies' 10.1 per cent share.