Lenovo on Tuesday said it was in preliminary talks with an unidentified party on a potential smartphone business joint venture. The world's No.2 PC maker – according to shipments – gave no further details about this, though.

Japanese media has reported that Lenovo, just shy of overtaking HP as the top global PC maker, will set up a joint venture with Japan's NEC to focus on smartphone manufacturing and distribution.

NEC was in talks with Lenovo, already a joint venture partner in PCs and tablets, early this year on the sale of its mobile unit, according to media reports and a source familiar with the discussions.

An NEC spokesman declined to comment on the possibility of a joint venture but acknowledged the troubles that the unit is facing. He went on to say,” Our mobile phone business is in a difficult state and we acknowledge that we need to decide on a direction for the business. For that, we are considering various opportunities and that stance up until now have not changed.

Looking to expand overseas

Lenovo is looking at expanding its smartphone business..

Lenovo has spent heavily over the past few years to strengthen its PC business, with purchases such as Brazilian electronics maker CCE last year, Germany's Medion in 2011 and IBM's PC business in 2005.

It is also conducting a roadshow for a US-dollar-denominated notes issue on Tuesday, although it has given no details. “The board would like to inform the shareholders of the company and potential investors that the company is in preliminary negotiations with a party in connection with a potential joint venture transaction,” Lenovo said in a statement to the Hong Kong stock exchange.

With demand booming for mobile computing gadgets, Lenovo has been aggressively pushing out smartphones and tablet PCs and is now the second largest smartphone maker in its home market in China.

Apart from NEC's mobile phone business, Lenovo has been rumoured in the market over the past year to be on the hunt for other acquisition targets, including IBM Corp's low-end server business, Nokia  and BlackBerry maker Research In Motion.

“Lenovo lacks expertise in its enterprise and smartphone businesses, so I wouldn't be surprised if it is making acquisitions in these areas to consolidate its position,” said Vincent Chen, a PC analyst at Yuanta Research.

The presence of Lenovo smartphones in Indian markets as of now is minimal. As reported earlier, though, Lenovo is aiming at overseas markets as well, and with recent advertisements showing the Lenovo K900 prominently, it should not be long before the company finds its way to Indian shores.

With inputs from Reuters

Tags: , , , , , , ,