Japanese electronics maker Kyocera has confirmed it will buy Sanyo’s loss-making mobile phone business for 45-50 billion yen (US$375-468 million), a deal that will create the world’s sixth largest mobile phone maker. The deal, to be completed on April 1, aims to boost Kyocera’s presence in the US (Sprint Nextel is a major customer of Sanyo) and give Sanyo an opportunity to focus on its core products such as rechargeable batteries. “We need to strengthen our overseas operations, but our own resources are limited,” Reuters reports Kyocera President Makoto Kawamura as telling a news conference. “We cannot expect rapid growth in the domestic market with so many cellphone makers and so much competition.” A final selling price is expected to be set by September.

According to Gartner, Kyocera was the ninth largest mobile phone maker in Q3 last year, while Sanyo was 10th. Their combined operations would put them behind Nokia, Samsung, Motorola, Sony Ericsson and LG Electronics. However, analysts believe the move is unlikely to give Kyocera the business scale it needs to compete squarely with rivals. The combined entity will have a global market share of 1.5%, behind LG’s 7.1% share. “The move is somewhat negative for Kyocera,” Akihiko Uchino, Senior Analyst at Mitsubishi UFJ Securities, told Reuters. “Even if you combine the two cellphone operations, the global market share remains small.”