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(Update) Sony, NEC to Team Up to Strengthen Optical Disc Drive Biz

Posted on: Thursday, 17 November 2005, 18:00 CST

Tokyo, Nov. 17 (Jiji Press)--Sony Corp. and NEC Corp. said Thursday they will establish a joint company to integrate their optical disc drive operations.

Planning to launch the joint firm on April 1 next year, the two electronics giants aim to reinforce the optical disc drive business by merging their competitive technologies, which revolve around Sony's optical pickup devises and NEC's large-scale integrated circuits, the firms said.

The new company will focus on planning, designing, manufacturing and marketing to worldwide manufacturers of DVD drives and compact disc drives that are integrated into personal computers and other devises.

Sony will put up 55 pct of capital for the company and NEC the remainder. The amount of capital will be set later, the two companies said.

Sony President Ryoji Chubachi said that by "teaming with NEC, which has excellent technology in areas such as DVD drives, I believe we can work effectively to enhance our product lineup and quality on a global scale."

NEC President Akinobu Kanasugi said his company "made the best choice in partnering with Sony, with whom we can build a total value chain covering procurement of key components, production and marketing."

The optical disc drive operations of the two firms combined generated about 220 billion yen in the fiscal year to March 2005.

As for a next-generation disc, the new firm is expected to deal in both the Blu-ray Disc format, promoted by a group led by Sony, and the High-Definition DVD format, proposed by a group including NEC.

But the announcement of the joint venture plan has spawned speculation that NEC may be defecting to the Blu-ray camp because Sony will have a majority stake in the joint firm.

The Blue-ray camp is leading in the race to establish supremacy in the next-generation disc market, winning the support of such Hollywood movie studios as Walt Disney Co., Twentieth Century Fox and Metro-Goldwyn-Mayer Inc.

Warner Bros. and Paramount Pictures, which previously supported the HD DVD format, are now planning to make their titles available in both formats.END

Source: Jiji Press English News Service

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