Top mobile phone chip supplier Texas Instruments, NEC and Matsushita Electric Industrial are in talks over possible cooperation in cellphones, Matsushita and NEC said on Friday.
NEC's chip unit, NEC Electronics Corp., and the cellphone unit of Matsushita, Panasonic Mobile Communications Co., are involved in the talks, they said, adding that nothing concrete has been decided.
Reuters reports that according to a source close to the talks, the five companies are aiming to set up a joint venture to develop microchips and software used in W-CDMA third-generation (3G) mobile phones to cut costs.
The microchips will be used in mobile phones and also sold in overseas markets where high-speed 3G services are picking up.
News of the potential alliance lifted shares in NEC, whose earnings are weighed down by loss-making mobile phone operations.
Comments by Matsushita and NEC, Japan's two largest cellphone makers, come after a report by business daily Nihon Keizai that the five firms will set up a mobile phone components venture in Japan as early as this summer.
The new entity will likely be capitalized at around 10 billion yen ($84.9 million), with NEC and Panasonic Mobile Communications Co each taking a stake of about 30 percent, while Matsushita, Texas Instruments and NEC Electronics will equally split the rest, the paper said.
NEC and Matsushita are two of the first companies to offer 3G mobile phones based on the W-CDMA format, but they only hold a few percent of the global market, falling far behind industry leaders such as Nokia and Motorola.