Semiconductor giants NEC and Renesas today said they would merge in a deal likely to change the electronics industry. The two plan to finish talks by July that would create a single company by next April. Such a deal would give them roughly $13 billion in combined yearly sales and would make it the single-largest Japanese company building processing technology.

Observers view the merger as the result of financial pressure created by the economy, which is threatening significant losses for the separate companies. Both are profitable but under threat as fewer chips get sold with reduced demand for home electronics.

The deal would also create the world's third-largest semiconductor company behind Intel and Samsung and is likely to influence the choice of mobile processors, storage and other parts normally made by now smaller companies, such as SanDisk and Toshiba. Hitachi and Mitsubishi already share joint control of Renesas.