Sony and NEC Merge into Optiarc

Sony and NEC are to merge their respective optical drive divisions into a single $1.9bn jointly owned company, Sony NEC Optiarc, the two Japanese giants announced yesterday.

Sony representatives have acknowledged that the move may pave the way for reconciliation between the two next-generation optical disc formats, Blu-ray and HD DVD.

Samsung Electronics Co. Ltd. and Toshiba Corp. also formed a joint venture for their optical disk operations in 2003.

In November, executives estimated that the combined venture would control about 28 percent of the market for optical drives; combined sales will total 220 billion yen or about $1.88 billion. Sony will supply optical pickups and head technology, while NEC will contribute with its chipmaking design expertise.

Sony will be the bigger of the two stakeholders in the joint venture. It will own 55 per cent of Sony NEC Optiarc, to NEC's 45 per cent. The two parents will spin out their respective optical drive businesses on 1 April before establishing the merger expected on 3 April.

Shinichi Yamamura, who runs the Video Business Unit at Sony, will head the new venture, the two companies said. The deal must still be approved by regulatory agencies and shareholders.