• Kyodo News

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NEC Corp. and China’s Lenovo Group Ltd. are in final talks to tie up in the personal computer business to enhance their global presence, an NEC source said Friday.

The alliance of the two firms, which command the top share in their respective domestic PC markets, would likely result in Lenovo taking a majority stake in NEC Personal Products Ltd., a wholly owned NEC subsidiary that manufactures and markets PCs, by the end of this year, the source said.

If realized, it would be the first full-fledged alliance between major Japanese and Chinese players in the information technology industry, and analysts say the tieup could affect electronics makers’ strategies in the IT business.

Research firm International Data Corporation Japan expects Japan’s conventional PC market to remain sluggish for the time being, with PC prices continuing to fall while demand for smart phones and tablet devices rises.

NEC, known for its PC-98 series that helped spread PCs, has already pulled out of overseas PC markets in the face of cutthroat competition.

It wants to seize on the tieup to improve its business efficiency, including cutting parts procurement costs.

For its part, Lenovo is eager to increase its market share in Japan on the strength of NEC’s production facilities and sales network.

NEC Personal Products is expected to retain its workers after Lenovo takes control. It is also likely to keep NEC’s brand name and continue to offer customer support.

Lenovo — formerly called Legend — was founded in 1984 by 11 Chinese Academy of Science researchers. It later bought the personal computer division of IBM Corp.

NEC, which lags behind its rivals with a group net loss of ¥27 billion in the April-September period last year, is focusing its resources in competitive areas such as information technology services and infrastructure.

The NEC-Lenovo tieup plan surfaced at a time when other Japanese electronics companies are also accelerating efforts to cope with consumers’ changing demand and the mature domestic PC market.

Fujitsu Ltd. is strengthening its PC business in other parts of Asia, especially in China, while integrating its mobile phone business with Toshiba Corp. to boost competitiveness on the development of smart phones.

Toshiba is seeking to boost its efficiency by centering its development activities in Japan and production overseas.

Panasonic Corp. is focusing on notebook PCs for businesses, while Sony Corp. integrated its PC section with an output base in Nagano Prefecture in April to speed production.

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