Siemens has found a partner for its mobile phone business: Taiwanese giant BenQ, formerly Acer. The new operation will be similar to the Sony Ericsson joint venture founded in 2001, but there is a difference. According to a German report, BenQ will be the majority share holder, with Siemens retaining just a 10 per cent stake.

(The same source last year suggested Siemens' Chinese distributor would purchase the troubled handset business, incorrectly as it turned out; LG Electronics had also been touted as a possible partner.)

Siemens has been losing sales in a growing market, with shipments falling from 15.2 million a quarter in the first three months of the fiscal year to 13.5 million in the final period. The company has shaved €1.3 billion costs as a result, so the new JV's most immediate concern will be to prime the product line so it has something viable to offer in 18 months' time.

So what went wrong for Siemens, which married excellent engineering to smart design, and spared little expense promoting the result? The mobile division was caught between big brands such as the leader Nokia, and no-name, carrier-branded handsets. Even Sony Ericsson struggled to find its feet at first, with two of the most recognisable brand names behind it, before fleshing out its low and mid-range. So before the new company can decide what the product mix should be, it needs to figure out what kind of company it is.

Neither Siemens nor BenQ had confirmed the news at press time, but reports suggest the Siemens board will approve the deal today. ®

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