Japan's electronics giants Fujitsu Ltd and Toshiba Corp said on Thursday that they have agreed to merge their mobile phone operations and start a new company in October.
Toshiba is to transfer its mobile phone business to the new company, in which Fujitsu is to acquire a majority of the shares, the two companies said in a joint statement.
The move would create Japan's second-largest cellular phone maker behind industry leader Sharp Corp.
Fujitsu and Toshiba are aiming to "develop highly competitive, next-generation handsets for the expanding smart phone market", the two companies said.
The move would help the two companies expand their customer base as Fujitsu supplies to Japan's top mobile phone carrier, NTT DoCoMo Inc, and Toshiba mainly makes handsets for the second-leading carrier, KDDI Corp.
"By combining their mobile phone development know-how and technological strengths, Fujitsu and Toshiba intend on enhancing their handset development capabilities and at the same time improving business efficiency," the two companies said.
The two companies are to sign a final contract at the end of July, they said.