Report: NEC mulling handset sale to Lenovo

Report: NEC mulling handset sale to Lenovo

02 APR 2013

Japanese electronics company NEC is apparently in talks with Chinese IT giant Lenovo over the sale of its mobile phone business, Reuters said.

NEC is also reported to have held discussions with other Japanese players with regard to consolidation, although these potential partners were not named.

According to Reuters, the company said in a statement that “amid the rapidly changing market we are considering a number of ways to bolster the competitiveness of our mobile phone business, but nothing has been decided”.

NEC has already folded its Japanese handset business into a joint venture with Casio, although it still owns the majority of the unit – 70.7 per cent, compared with 20 per cent for Casio, and 9.3 per cent for third partner Hitachi.

Earlier this year, when asked about the future of the handset business – which despite falling volume, is believed to be profitable now – NEC said that “volume is crucial” in this segment.

Unlike its tier-one handset rivals, NEC has not been able to grow its business internationally, meaning it loses out on the economies of scale available to its bigger rivals.

Japanese newspaper Asahi Shimbun reported last week that NEC was set to close a plant producing devices in the current financial year (to March 2014).

In contrast, Lenovo is growing fast in the mobile space, aided in no small part by its strong performance in its home market of China.

In addition to NEC, the Chinese company has also been linked with an acquisition of BlackBerry, although it has never been officially confirmed that this was an option.

NEC and Lenovo are also partners in the PC market, which was seen as an attempt by NEC to prop-up its ailing operation through an overseas partnership.

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Steve Costello

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