NEC is to exit the smartphone business, having failed to agree terms for a joint venture with ambitious Chinese vendor Lenovo, according to reports.

It was noted early in June 2013 that the two companies, which already have a relationship in the PC space, were in preliminary talks over a partnership. While NEC did not detail who it was talking to, it did acknowledge that its mobile phone unit is “in a difficult state”.

According to Reuters, NEC had offered Lenovo a majority stake in NEC Casio Mobile, the device unit it controls. Other shareholders are Casio (20 per cent owner) and Hitachi (9.3 per cent), which contributed assets to the business when it was created.

It was suggested that NEC will “focus on conventional handsets”, as if focusing on the shrinking feature phone market is a better opportunity, and will sell some of its mobile-related patents.

While NEC was once a significant force in the Japanese market, it has lost market share as the country has embraced smartphones, and overseas vendors including Apple and Samsung have started to gain traction.

It has also failed to gain a significant presence internationally, meaning it cannot benefit from the scale benefits available to its rivals.

Contrastingly, Lenovo is already in a strong position in its home market of China, and is using this strength as a platform to push into other emerging markets.

The IT giant has also previously been linked with an acquisition of BlackBerry.