With global smartphone shipments closing in on one billion units this year, Chinese technology giant Lenovo may be looking to an ally to help expand its mobile-phone operations.
Lenovo, the world's second-largest supplier of personal computers, is negotiating with Japan's NEC Corp to buy its struggling handset subsidiary, NEC Casio Mobile Communications.
According to an Asahi Shimbun report yesterday, NEC had started discussions with Lenovo about selling that business last year. The talks were confirmed in a separate Reuters report by a source familiar with the negotiations.
If the purchase goes through, it would mark the second major deal between Lenovo and NEC this decade. Lenovo invested about US$175 million worth of company shares with NEC in 2011 to take a 51 per cent stake in a joint venture, NEC Lenovo Japan Group. It is the biggest personal computer supplier in Japan, the industry's third-largest market.
Kitty Fok, the general manager at technology research firm IDC China, said: "Lenovo has been focusing increased attention on its smart mobile devices business, so taking this opportunity to build it through a strategic acquisition makes sense.
"Negotiating with NEC, which is its joint venture partner, makes it easier for Lenovo to accomplish that goal."
A Lenovo spokesman said the company has "no comment on rumours and speculation in the market".
Citing a statement that the company issued to the Tokyo Stock Exchange yesterday, an NEC spokesman said: "We are considering a number of ways to bolster the competitiveness of our mobile-phone business, but nothing has been decided."
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 is headquartered in the city of Kawasaki, just south of Tokyo.
The mobile-phone firm sells smartphones under the NEC and Casio brands in Japan, where it lags behind other suppliers. Counterpoint Research last month reported that Apple was Japan's top smartphone brand last year, with a 15 per cent market share. Domestic brands Sharp and Fujitsu each had a 14 per cent share last year.
Lenovo, which supplies personal computers in more than 160 countries, currently sells its own-brand smartphones in mainland China, Russia, Vietnam, the Philippines, Indonesia and India.
IDC has forecast global smartphone shipments to reach 918.6 million units this year, surpassing sales of regular mobile phones for the first time. It said mainland China will remain the world's largest market for smartphones.