TOKYO (Reuters) - Japanese electronics maker Kyocera Corp (6971.T) plans to withdraw from China's booming mobile phone handset market due to mounting losses amid competition from cheaper producers.
Kyocera, which plans to buy restructuring electronics maker Sanyo Electric Co's (6764.T) mobile phone business, said on Tuesday it has agreed to dissolve a joint venture with Chinese electronics parts maker China Zhenhua Science & Technology Co Ltd (000733.SZ).
The withdrawal underlines the failure of Japanese firms' strategy to sell high-end models with cameras and music-playing capabilities in a market dominated by lower-priced phones by giants like Nokia (NOK1V.HE) and Motorola Inc (MOT.N).
"We will strengthen our handset business through synergies with Sanyo in Japan and in North America," Kyocera President Makoto Kawamura said at a news conference. "We decided there was no prospect for our business in China."
The venture posted annual losses of about 700 million yen to 800 million yen ($6.6 million to $7.5 million) ever since its start-up in December 2001, he said.
Kyocera would hand over 45 percent of its 70 percent stake in the venture to China Zhenhua, give the remaining to another company based in Hong Kong, and also forgive roughly 850 million yen in debt, a Kyocera spokesman said.
The losses would be reflected in fourth-quarter earnings, he said.
Kyocera revised down its outlook for the year to March to an operating profit of 140 billion yen, down from a previous forecast of 151 billion yen, on sluggish sales of ceramic packaging used to protect high-speed fiber-optic microchips.
The consensus estimate by fourteen analysts polled by Reuters stood at 147.5 billion yen.
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