Toshiba and NEC in talks about chip merger

Hard times forcing competitors to seek shelter together

Chip

Amid the electronics sector's spiral into red ink, it has emerged that Toshiba and NEC are in talks about working together to get through the crisis.

Sources inside both companies say the pair are looking to merge their chip and semiconductor businesses to cope with sagging prices and collapsing demand for memory and embedded processors used in many domestic goods.

Secret talks

The secret talks are likely to result in Toshiba putting its system-chip manufacturing arm into a joint venture with NEC's semiconductor operation, although nothing has been made official yet.

As well as the huge job losses expected at NEC, the company has said publically that it needs to trim its costs by over £600 million in the next two years.

Fujitsu too

At the same time as the Toshiba talks, NEC is also reportedly looking to Fujitsu for further mergers in the chip business.

Whatever comes out in the wash, it's clear that the electronics sector will soon have a very different look to the one we're so familiar with.