Lenovo, Fujitsu 'discuss merger of PC businesses'

Chinese firm likely to take major stake in venture as it eyes bigger global market share

TOKYO • Lenovo Group is in talks with Fujitsu to merge their personal computer businesses, with the Chinese manufacturer taking a majority stake in the venture, a person with knowledge of the matter said.

The two sides are still discussing pricing and terms, said the person. The companies are aiming to reach an agreement this month, according to the Nikkei newspaper, which reported the deal yesterday.

An alliance with Fujitsu would give Lenovo, the world's biggest PC maker, a bigger foundation to expand its share. Lenovo had 19.4 per cent of the global PC market last year, compared with 2.1 per cent for Fujitsu, according to IDC.

Lenovo is also seeking to make further inroads into smartphones, while embarking on a plan to cut US$1.35 billion (S$1.85 billion) from annual costs and shed 3,200 jobs. The company said in August it was making progress and would turn around its business next year.

Fujitsu shares rose 5.7 per cent to 569 yen at the close in Tokyo. The stock was down 11 per cent this year through Wednesday. Lenovo rose 1.5 per cent in Hong Kong, but is still down 33 per cent for the year.

Japan's PC makers have been scaling back their operations or exiting the business entirely, as more people use mobile devices to check e-mail, manage their finances and access the Web.

  • 19.4%

    Lenovo's share of the global PC market last year

    2.1%

    Fujitsu's share of the global PC market

Earlier this year, Sharp agreed to a buyout by Taiwan's Hon Hai, better known as Foxconn, after the Japanese industrial mainstay was pummelled by huge losses and debts.

China's Midea Group has bought more than 80 per cent of loss-making Toshiba's home appliances arm, while Sony has unloaded a string of assets to claw back to profitability, including its laptop unit and a Manhattan office building.

Fujitsu had been struggling to find a partner, and talks with Vaio and Toshiba were on the verge of collapse, the Wall Street Journal reported in April.  

The Nikkei said the Lenovo-Fujitsu business may merge in the future with Lenovo's PC venture with NEC Corp, which was formed in 2011.

Fujitsu would move its PC planning, development, manufacturing divisions to Lenovo as part of the deal, the Nikkei said, with about 2,000 Fujitsu workers likely to be relocated to Lenovo.

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A version of this article appeared in the print edition of The Straits Times on October 07, 2016, with the headline 'Lenovo, Fujitsu 'discuss merger of PC businesses''. Print Edition | Subscribe