Three Japanese semiconductor manufacturers including Panasonic and Fujitsu are in talks to merge their operations to create a national champion chipmaker that would be backed by the government, according to people familiar with the matter.

The discussions, which are still preliminary, could result in the second state-sponsored consolidation in Japan’s struggling electronics sector in recent months. The industry is facing tens of billions of dollars of losses this year and a number of companies have announced plans to restructure.

People briefed on the talks said the Innovation Network Corporation of Japan, a government-controlled investment fund that backed a similar three-way merger of touchscreen display makers last August, is negotiating to invest in the proposed business.