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September 15, 2009

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Japan cell phone firms in merger mania

CASIO Computer Co and Hitachi Ltd will merge their struggling cell phone operations to cut development and manufacturing costs, the companies said yesterday.

A union would create Japan's second-largest cell phone maker with sales of 505 billion yen (US$5.6 billion) and could trigger more consolidation in a sector worn down from infighting in a crowded and dwindling market.

NEC, Japan's No. 3 handset maker, said it will split off its mobile phone division and merge it with a cell phone joint venture operated by Hitachi and Casio. How much the merger will save NEC has not been calculated, an NEC spokeswoman said.

NEC would hold 70.7 percent in the new venture, which will receive a 5 billion yen capital injection by June 2010. Casio will hold 20 percent and Hitachi 9.3 percent, the three companies said in a statement.

Japan's mobile phone market is shrinking, but phone makers are still shouldering hefty development costs, which can cost as much as 10 billion yen per new handset in the world's most technologically competitive mobile market.


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