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The combined operation will take the best technologies and expertise from both parties with the aim of increasing their aggregated 20 per cent of the global market and overtaking the 28 per cent share held by HLDS, itself a joint venture between Hitachi and LG.

Sony will hold a 55 per cent stake in the new company against NEC's 45 per cent and both companies are preparing to transfer their respective optical disc drive operations to the joint venture before 1 April 2006. The new operation will focus on the planning, design, manufacturing and marketing to manufacturers of optical disc drives and will operate on a global basis.

'The market for high value-added drives to be integrated into PCs and consumer electronics products is rapidly expanding,' said NEC's president Akinobu Kanasugi. '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 realise the aim of becoming the top vendor in this sector.'