DJ Matsushita Elec:Mulling 3G Cellphone Tie-Up With NEC,TI"

TOKYO (Dow Jones)--Matsushita Electric Industrial and NEC said Friday the two companies and Texas Instruments are considering a tie-up in the area of mobile phone handsets, in a move that could strengthen their cost competitiveness.

The three companies reportedly plan to set up a joint venture in Japan as early as summer and develop core cellular phone parts together.

The move is the latest in an industrywide consolidation for makers of mobile phone handsets, as they step up efforts to shoulder R&D costs for the third-generation handsets. The 3G service, which enables users to send videos and download Internet content at high speed, is quickly becoming popular in Japan.

Spokesmen at both Matsushita and NEC said five companies, comprising Matsushita, its mobile phone unit Panasonic Mobile Communications, NEC, NEC Electronics and TI, are mulling a tie-up.

"It is true that we are considering a tie-up," said the Matsushita spokesman, adding that the details haven't been decided yet. A TI spokesman in Tokyo was unable to confirm this.

The new joint venture, to be launched as early as this summer, will develop chips that handle communications functions and software for controlling them, the Nihon Keizai Shimbun said in its Friday morning edition. Chips developed by the joint venture will be used in Matsushita and NEC cellular phones. The three are expected to sign an official agreement this month, the paper said.

Matsushita and NEC have the top two market shares in terms of domestic sales of mobile phone handsets, but lag behind in the global market.

Matsushita's unit Panasonic Mobile Communications and NEC were ranked eighth and ninth in the global market during the October-December quarter, well behind top runners such as Nokia and Motorola, according to the research firm Gartner.

Mobile phone handset operations of both Matsushita and NEC are estimated to have suffered operating losses for the fiscal year ended March, due to cutthroat competition in Japan and slumping sales in China and other overseas markets, Nikkei said.

Earlier this year, Sanyo Electric and Nokia agreed to create a mobile phone handset joint venture, which is slated to kick off operations in the third quarter.

-By Hiroyuki Kachi, Dow Jones Newswires, 813-5255-2929, hiroyuki.kachi@dowjones.com

-Edited by Chris Gallagher

(END) Dow Jones Newswires "

Posted to the site on 9th April 2006