The two companies have a partnership in the personal computers business and NEC was in talks with Lenovo for a deal for its smartphones operations since late 2012, the Japanese daily reported.
The Japanese electronics company had offered Lenovo a majority stake in NEC Casio Mobile Communications Ltd, its subsidiary that makes smartphones. Casio Computer Co and Hitachi Ltd are among NEC Casio's current investors.
NEC, once a market leader in the smartphones business in Japan, currently has a market share of about 5 percent, the business daily said.
The Japanese company will now focus on conventional handsets and plans to sell some of its mobile phone-related patents, according to the Nikkei.
NEC will reassign majority of NEC Casio employees to other group firms, the paper said.
© Thomson Reuters 2013