Posted by : Anonymous on Jun 26, 2004 - 05:45 AM General

TOKYO (AP) - Hitachi Ltd. and NEC Corp. will establish a joint venture in October to develop and manufacture network equipment such as routers and switches, the Japanese electronics giants announced Friday. Hitachi and NEC said they hope the new company - with initial capital of about 5.5 billion yen (US$51.06 million) - will take on rivals such as Cisco Systems Inc. and Juniper Networks Inc. It will focus on high-end to mid-range routers and switches.
The venture will target 40 billion yen (US$371.4 million) in sales for the fiscal year ending March 2006. Hitachi will hold 60 percent of the venture and NEC will have the remaining 40 percent.

Hitachi and NEC said the new venture will first focus on the Japanese market, where it will be competing with rivals such as Furukawa Electric Co. and Fujitsu Ltd.

The venture will aim to control about one-third of Japan's market share for routers and switches within the next few years, said Isao Ono, executive vice president of Hitachi. The parent firms commanded a combined share of about 10 percent of the market as of the end of March.

It will then gradually expand into overseas markets, he said.

The venture, which hasn't been named yet, plans to release its first products by the end of March 2005. It will supply products to Hitachi and NEC, which will then market them to their clients, including companies in the telecommunications, government and public sectors.

In Japan, the market for routers and switches was worth about 320 billion yen (US$2.97 billion) in value in the year ended March, the companies said. NEC and Hitachi estimate the global market is about 10 times that size and will likely grow by at least 5 percent annually in coming years.

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