Three Japanese hardware giants Renesas Electronics, Fujitsu and Panasonic are reportedly in talks to integrate their system chips operations.
According to Japanese newspaper Nikkei in a report Tuesday, the new company will develop system chips--which is the brain of electronic devices and automobiles--using its parent companies' expertise in image processing, telecommunications and other technologies.
The step aims to create a globally competitive chipmaker which will be important for survival in the chip industry. With this merger, Toshiba will be the only other Japanese player to not have merged.
For a start, the three companies will spin off their system chip design and development divisions to create a new company, the Japanese newspaper said.
A basic agreement is expected to be established by end-March, with the aim to create a merged entity by end-2012. The project is likely to receive grants from government-backed investment funds Innovative Network, said Nikkei.