Shares in Toshiba rose after the news
Japanese electronics giant Toshiba has confirmed it is in talks to buy Fujitsu's hard disk drive (HDD) arm.
A deal would create the world's largest maker of small hard drives, which are used in products such as laptops or satellite navigation equipment.
Toshiba is looking to expand its HDD business, while Fujitsu wants to concentrate on its IT consulting.
Fujitsu said the company was in talks with a number of parties about the future of its HDD operations,
"Size matters in the hard-drive business, and Toshiba would be able to benefit from being the biggest maker of 2.5-inch drives," said Mitsubishi UFJ Securities analyst Yukihiko Shimada.
In Japan,the Nikkei business daily said any deal between Fujitsu and Toshiba would be worth 30bn-40bn yen ($340m-$450m; £233m-£308m).
Shares in Fujitsu and Toshiba climbed more than 5% on the news.