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Hitachi, NEC Joint Venture To Target High-End Networking

Hitachi and NEC later this year plan to form a joint venture that targets the high-end networking market.

The two Japanese companies said Friday that they have agreed to launch the venture in October with plans to build backbone routers and switches for carriers, large enterprises, government and public-sector customers. In those market segments, they would face competitors such as Cisco Systems and Juniper Networks.

The expansion of the Japanese broadband market--a trend also occurring on globally--has created new business opportunities, which prompted the joint venture, Isao Ono, executive vice president and executive officer of Hitachi, said in a statement. "The strong combination of Hitachi's backbone router/switch business and NEC's development capability will create a new leading vendor in this promising market," Ono said.

The new company, to be based in Tokyo, will be staffed by about 350 employees culled from both vendors and have capital of around 5.5 billion yen ($51.4 million). The venture will supply products to both vendors and market the products through business partners under its own brand name, according to Hitachi and NEC.

Plans call for Hitachi to own 60 percent of the new company and NEC to own 40 percent.