Japanese electronics firm Fujitsu Ltd said on Monday it would put its struggling semiconductor operations into a new unit, in a move that could smooth the way for partnerships with other chip makers.

Fujitsu's business building system chips, used in products ranging from digital cameras to supercomputers, has suffered from falling prices and the high cost of keeping up with the latest technology.

The company also said it would transfer development and test production of state-of-the art system chips to its Mie plant in central Japan from a technology centre in Tokyo, at a cost of some 10 billion yen ($94 million).

The firm said these moves are designed to speed up its chip operations to better compete in the industry.

Price falls and a shortage of engineers, coupled with massive investment costs, are prompting system chip makers to band together as they race to move to smaller circuit sizes to cut production costs and make energy-efficient and powerful chips.

Shares of Fujitsu Ltd ended the morning session down 1.4 percent to 716 yen.

($1=106.69 Yen)

(Reporting by Taiga Uranaka)

Fujitsu Electronics Japan