Hitachi and NEC plan to form a joint venture company in October that will produce network routers and switches for corporations and telecommunications carriers.
The joint venture, which has yet to be named, would supply backbone routers and switches to Hitachi and NEC for the two companies to sell on to their own customers, executive vice-president of Hitachi, Isao Ono, said.
It would also sell the products through distributors under its own brand name and could supply them on an OEM basis to other network equipment vendors, Ono said.
The joint venture expected to market its first product before March next year, he said, although he did not specify the product. The company's broad market would be demand for mid- to high-end routers and switches of the type used by telecommunications carriers and corporations in mission-critical applications.
The new company hopes to achieve sales of $US373 million in fiscal year 2005, which begins in April next year.
The primary market for the joint venture, at least initially, would be Japan, Ono said. The company expected to sell about 90 per cent of its products domestically and was targeting a market share of about 30 per cent.
The joint venture would be based in Tokyo and employ a staff of 350 employees with initial capital of $51.2 million, the statement said. Hitachi would own 60 per cent of the venture and NEC would hold the remaining 40 per cent, it said.
Hitachi and NEC stood to gain from the joint venture because it would help speed up the amount of time it takes to develop and sell new products, senior executive vice-president of NEC, Kaoru Yano,, said.
The network equipment market was very competitive and time-to-market was very important, he said.