Sanyo Electric announced Monday that it would sell off its cellphone unit to Kyocera Corp, for $375M, netted of outstanding debts. Sanyo had taken a $2.6 billion cash infusion from Goldman Sachs, Daiwa Securities and Sumitomo Mitsui Bank in 2006 to stave off record losses and a sale of its cellphone unit had long been expected. The combined Kyocera-Sanyo business will have about 10% global CDMA handset share, making them the #4 provider behind Samsung, LG, and Motorola, and will be the sixth largest handset maker overall, behind Nokia, Samsung, Motorola, LG, and Sony Ericsson.
Ja, sure, this generally makes sense. Kyocera purchased Qualcomm’s CDMA handset business in 1999 and sells into Japan’s KDDI, along with Verizon Wireless, MetroPCS, US Cellular and Cellular South in the US. Sanyo also sells into KDDI, and Sprint in the USA. Both also provide PHS handsets in Japan and Asia. (Will PHS get a new lease on life with Willcom’s WiMAX license award in Japan? Does awarding a WiMAX license to a PHS provider make sense? We’ll see.)
The two companies are neighbors in Japan’s Kansai region, with Kyocera (Kyoto Ceramic) based in Kyoto and Sanyo in Osaka. For better or for worse scale matters, and the acquisition should lead to some scale improvements and channel efficiencies, although modest at best. To give some perspective, the combined entity will have 1.5% global handset share, or about an order of magnitude below Samsung and Motorola. Even post-merger, assuming relatively seamless integration, it will still be hard to compete on price.
Two thousand Sanyo employees will join Kyocera – where they may even meet a few ex-Qualcomm employees – which will preserve the Sanyo brand.
Meanwhile, Qualcomm itself, having long ago spun off its handset business and infrastructure business, seems to be doing just fine.
Post-script: Today Nokia announced it had reached 40% market share in Q4-07, having shipped 133.5M units out of an industry estimate of 336M units shipped.