Renesas, Fujitsu, Panasonic may merge systems chip ops

Japanese chip giants in talks to create new company manufacturing system chips with parent companies' capabilities; basic agreement terms expected in March.

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.