Sony and NEC said on Thursday they have reached a basic agreement to set up a optical disk drive joint venture. The companies will work together from now to reach agreement on a final contract.
Sony will hold a 55% stake in the new company while NEC's stake will be 45%. Sony and NEC will make preparations to transfer their respective optical disc drive operations to the Joint Venture, targeting a business start on April 1, 2006. The Joint Venture will focus on the planning, design, manufacturing and marketing to manufacturers of optical disc drives (DVD and CD drives) for integration into products such as PCs. The company will operate on a global basis.
The new company will pool the best in optical disc drive technology (e.g. NEC's strengths in LSIs and Sony's expertise in optical pickups) to deliver high quality and reliable products to consumer electronics and PC makers on a timely basis.
Sony currently has some 160 workers involved in the optical disc drive business, while NEC has 180.
Sony will appoint the president of the venture, and NEC the executive vice president.
Sony's President and Electronics CEO, Ryoji Chubachi commented, "Optical disc drives are key components for a broad range of devices and we are strategically focusing our development resources in this sector. 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's President Akinobu Kanasugi commented, "The market for high value-added drives to be integrated into PCs and consumer electronics products is rapidly expanding. I believe we have 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. This will allow us to realize the aim of becoming the top vendor in this sector."
Sales of the two firms' optical disk drive businesses totaled about $1.8 billion in the business year ended in March.
The joint version will only apply to the red-laser-based optical technologies of the companies, and has nothing to do with the upcoming blue-laser plans of Sony and NEC. Sony promotes Blu-ray Disc format and NEC is promoting HD DVD format. Both NEC and Sony will continue its support in the R&D and the manufacturing process related to the HD DVD and Blu-Ray respectively, through different operational companies.