According to the Kyodo news agency in Japan, NEC and Toshiba are in talks to integrate their chip operations.
In truth the talks have been going on a lot longer than this. The crunch came when companies had to make up their minds about what to do about 32nm manufacturing.
A couple of years 
ago, J J Yamaguchi, executive vice-president and member of the board of NEC Electronics, told Electronics Weekly: "We have to make the decision next year [2007]. The choices are: Shall we have our own 32nm fab? Shall we go to foundry? Or shall we have a joint fab?"
The first option looks the longest shot. "It's unlikely we'll have our own 32nm fab," said Yamaguchi. However, he made an exception to this for the automotive semiconductor business where customers' quality issues require suppliers to have their own in-house manufacturing.
For this, a relatively small production line, maybe not at the leading edge because of the car industry's multi-year design-in times, could be retained. However, a solely-owned, high volume 32nm fab does not look a likely option because of cost.
"After 45nm, the commitment for fabrication will be very high," said Yamaguchi. The second option, going to foundry, could involve any of the major three companies. "There are many feasibility studies. We know the capabilities of UMC, TSMC and Chartered," said Yamaguchi. "We have not yet decided." Currently NEC makes 90% of its wafers in-house.
The third option, a joint fab, looks the most promising. "Our natural ally would be Toshiba, because we have developed the process technology together," said Yamaguchi.
With 45nm fabs costing between $3.2bn and $3.5bn, according to Intel, the bill for a 32nm fab may be not far short of $4bn.
According to one industry study, a company would need $13bn in revenues to get a return on a 32nm fab, and only Intel, Samsung and, potentially, TSMC, have that.
NEC and Toshiba have been technological allies for many years being one of the two groupings for Japan's famous VLSI Project of 1976 -1980, which gave the Japanese semiconductor industry the lead in memories.
The other grouping in the 1976 VLSI Project was Fujitsu-Hitachi-Mitsubishi. With Hitachi and Mitsubishi out of the game, that leaves Fujitsu out in the cold. It could try and join NEC-Toshiba and it could also join Renesas-Matsushita-Sanyo. Or it could become a fables semiconductor company.
The Japanese semiconductor industry is expected to decline 15% this year, according to analysts Future Horizons. Particularly after the Q308 collapse of the digital consumer market, one of the Japanese semiconductor industry's big applications, the industry is expected collectively to lose $5.5bn in the year to the end of March 2009.
The effect of that loss will be, according to the CEO of Future Horizons, Malcolm Penn, will be to force further re-structuring on the Japanese semiconductor industry which, according to Penn, "Has never really re-structured."
Already this year, Sanyo and Matsushita are talking merger talk and so are Rohm and Oki.