Japan's electronics giants Fujitsu Ltd and Toshiba Corp announced that they have decided to amalgamate their mobile phone operations and commenced a new company by October this year.

In a joint statement, the two companies stated that Toshiba is to transfer its cell phone business to the new company, in which Fujitsu is eyeing to get hold of a majority stake.

The move would make Japan's second-biggest cellular phone maker behind industry leader Sharp Corp.

Fujitsu and Toshiba are directing to build up highly cutthroat, next-generation cellular phones for the growing smart phone market.

The move would help the two companies expand their customer base as Fujitsu supplies to Japan's top mobile phone carrier, NTT DoCoMo Inc, and Toshiba mainly makes handsets for the second-leading carrier, KDDI Corp.

"By combining their mobile phone development know-how and technological strengths, Fujitsu and Toshiba intend on enhancing their handset development capabilities and at the same time improving business efficiency," the statement added.

The statement also said that two companies will sign up a final contract at the end of July. (With Inputs from Agencies)