Japan"s Toshiba Corp and Fujitsu Ltd have decided not to extend a planned semiconductor alliance into a full merger of their chip operations, company sources were quoted as saying on Saturday.
The computer and electronics giants announced in June that they would form a comprehensive alliance of their chip businesses with a view to an eventual merger of the operations.
On Saturday, Kyodo news agency quoted officials as saying the two had failed to agree on a full integration, mainly due to Fujitsu"s wish to keep its chip operation as its core business.
That would limit the agreed alliance to joint design and development of large-scale integrated (LSI) circuit chips, mainly used in Internet-capable digital consumer electronics.
"Our business models such as mainline products and strategies differ and there are no cases of (merger) success by other firms so far," a Fujitsu executive was quoted as saying.
The alliance is one of several forged among Japanese chip makers recently as a way to boost competitiveness.
A Fujitsu executive told Reuters in August that it was unlikely that a full merger would happen soon.
Industry analysts say the merged entity, with sales of 1.3 trillion yen ($10.7 billion), would have been the world"s second biggest microchip manufacturer and would have been a formidable challenger to market leader Intel Corp.