Sharp, Hitachi seen pairing on PCs


Most computer stocks are trading lower on Wednesday, in line with a broad tech slide that's hitting the Nikkei

TOKYO, Japan -- Sharp Corp. and Hitachi Ltd. have agreed to link up on personal-computer manufacturing, according to a report.

That will effectively put them in a four-way deal on joint operations with NEC Corp. and Mitsubishi Electric. All four are looking to trim production costs.

Those will likely be the first steps toward industry consolidation. Japan's chip industry saw a raft of joint deals earlier this year, and Hitachi paired with Mitsubishi Electric on chips in March (full story).

Japan's personal-computer makers are seeing intense competition from overseas producers such as Dell Computer Corp. and Hewlett-Packard Co., which have been gaining market share.

Specializing in profitable lines

Hitachi and Sharp will supply each other with computers for the corporate market, starting as early as this northern autumn, according to the Nihon Keizai Shimbun.

Sharp will provide notebook computers, the Nikkei reported Wednesday. Hitachi will generate desktop computers and servers.

Both will make the computers as original-equipment manufacturers, meaning the computers can carry the other company's brand.

The goal is to allow each company to specialize in its more-profitable lines while using its partner's products to broaden its offering. If they partnership works well, they may expand it to computers for home use.

The companies have agreed to a confidentiality clause preventing them from saying how many computers are involved. But the deal is expected to start with at least tens of thousands of computers a year.

Part of a four-way link

The computer-sharing deal may lead Sharp and Hitachi to form a joint venture or similar merged entity to develop computers and make shared parts.

Hitachi already takes corporate computers from NEC Corp., which also supplies Mitsubishi Electric Corp. NEC has been seeking production business for other computer makers to boost its own output.

NEC and Fujitsu are neck-and-neck for top spot in the personal-computer business in Japan. But total shipments fell 12 percent for the business year ended in March, to 10.7 million computers.

That was the first drop of more than 10 percent since the Japan Electronics and Information Technology Industries Association began tracking the data in 1978.

Stocks trading lower

Sharp is trading flat at 1,492 yen on Tuesday morning. Hitachi is down 2.7 percent at 720 yen, amid a technology selloff.

Mitsubishi Electric is off 2.24 percent at 481 yen. NEC is down 1.26 percent at 785 yen, in line with the Nikkei's overall decline of 1.29 percent by mid-morning.

Hitachi has been shedding 16,350 jobs to turn itself around (full story).