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"The market has not developed how we expected it to develop," said Midori Suzuki, a spokeswoman for Toshiba.
Suzuki denied reports in the Nikkan Kogyo Shimbun newspaper this week that Toshiba had originally planned to send 100 engineers to Germany to work with Siemens.
The two companies announced in November 2000 that they would pool their resources to research and develop technologies for 3G mobile phone handsets and terminals that could also access second-generation (2G) networks.
At the time of the announcement, the companies said they expected to produce the first dual-mode GSM/WCDMA (Global System for Mobile Communications/Wideband Code Division Multiple Access) handsets by early 2002, but that schedule is now unlikely to be achieved.
"We are continuing to talk with Siemens," said Suzuki. She conceded that there was still no finalised agreement, even though the deal was first announced nearly a year ago.
The company has also cut its handset shipment estimates for the US market by more than half. Originally Toshiba had expected to ship nearly six million handsets to the US in the current fiscal year, which runs until the end of March 2002. The figure has now been revised to just under three million.
Japanese mobile handset shipments have been revised upwards slightly, from three-and-a-half million to nearly four million, while Personal Handyphone System handset shipments have been revised down from half a million to just under a quarter of a million.