NEC, Hitachi and Casio have entered into talks to merge their mobile phone operations, a move that would create the second largest handset company in Japan after Sharp, according to several reports.

The Wall Street Journal, citing unidentified sources familiar with the talks, confirmed that the three companies had initiated talks. Earlier in the day, the Yomiuri Shimbun newspaper reported that the companies were in talks to merge their handset divisions by April 2010. NEC would hold a a majority ownership stake in the venture, which would have an estimated 20 percent of Japan's cell phone market. Sharp has around 22 percent market share.

The talks come as the Japanese market, which has long been at the cutting edge of mobile phone technologies, reaches saturation--thereby squeezing handset makers' profitability. Several companies, including Sharp, have sought to boost growth by charging into emerging markets like China.

For more:
- see this WSJ article (sub. req.)
- see this Bloomberg article

Related Articles:
Nokia to launch its own MVNO in Japan
Sharp to launch mini mobile PC