Hitachi, Casio to merge cellphone operations

Hitachi Ltd. and Casio Computer Co. Ltd. are planning to merge large parts of their respective cellular handset operations into a new joint venture, they announced Tuesday.

The new company, which has yet to be named, will be established in April 2004, and will handle design and development of new cellular telephones and procurement of parts, the two companies said in a statement. Production of the handsets will be consigned to two group companies, Yamagata Casio Co. Ltd. and Tokai Tec Co. Ltd.

Ownership of the company will fall 51 percent to Casio and 49 percent to Hitachi and it is expected to employ around 350 people. Discussions concerning specific details of the venture are ongoing, they said.

The decision to merge operations comes at a time when sales of new handsets in the Japan market are expanding but development costs and times are increasing because of the greater complexity of modern cellular telephone handsets.

In the first half of the current fiscal year, the period from April to September, domestic cellular telephone shipments totaled 26.7 million units, according to figures from the Japan Electronics and Information Technology Industries Association (JEITA). That represents a rise of 28 percent on the same period a year earlier.

By merging their operations the companies hope to benefit from Casio’s strength in high-density surface mount and image processing technology and Hitachi’s strength in high-speed communications and microprocessors with its Super H chip, they said. They also hope to save money by developing phones on common platforms and through joint procurement and also reduce development time, according to the statement.

Overseas markets will also be a focus of the venture. Both companies currently manufacture CDMA (Code Division Multiple Access) handsets for KDDI Corp.’s Au unit in Japan and see the opportunity for continued growth of the CDMA subscriber base overseas, particularly in China and the U.S., they said.