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Siemens is Reportedly in Talks With Fujitsu Over the Future of Their Computer Production

The Siemens group is reportedly in talks with Fujitsu over the future of their computer production joint venture Fujitsu Siemens Computers (FSC). It is unlikely that either partner alone will continue the computer production.

According to media releases here, several insiders have told the news agency Reuters that Siemens prepares to cancel the contract with Fujitsu. The contract between the two partners will automatically be renewed for another five years in fall 2009 — if not cancelled within the next few months.

According to the reports, Siemens executives already have travelled to Japan to negotiate with Fujitsu over a termination of the JV. According to the agreement, both parties have to offer its respective share of the joint venture first to the other partner before it can be sold. It is highly unlikely that Fujitsu is interested in taking Siemens' 50 percent share. It is equally unlikely that Siemens alone will continue FSC's activities.

Now the future of the computer manufacturer — with 10.500 employees one of Europe's largest manufacturers of servers, desktop and Laptop Computers — is unclear. Parent company Siemens recently had announced to cut almost 17.000 jobs.

In recent years, FSC constantly lost market share in an environment characterized by fierce price competition. Siemens CEO Peter Loescher repeatedly has criticized the weak performance of the business unit. Against the background of the weak dollar which makes imported computers cheaper, it became increasingly difficult for FSC to sell its products. The company has production sites in Augsburg and Sömmerda as well as R&D and sales activities in Munich.

When Siemens joined forces with Fujitsu in 1999, it contributed the hardware business of its subsidiary Siemens Nixdorf Computer into the activities. Later, the company also took over Siemens' IT service business.

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