The new company, Hitachi LG Data Storage, will be established in Tokyo on November 1 with a paid-in capital of 1.5 billion yen ($US13.9 million), said the two companies in a joint statement. Hitachi will hold 51 per cent of the company while LG holds the remaining 49 per cent.
At launch, the company will have about 350 staff drawn from both parent companies and will work on research and development of optical storage systems based on technologies such as CD-ROM and DVD (digital versatile disc) and rapidly emerging rewritable technologies such as CD-RW and DVD-RAM.
In addition to joint development, the two companies plan to jointly market the products to computer OEMs (original equipment manufacturers) under a new, yet-to-be-chosen brand name, said Setsuko Minamikawa, a spokeswoman for Hitachi. Some of the drives produced will also go to the two partners, who will continue to market them as peripheral products in the PC after-market under their own brand names.
The new joint venture draws upon the strengths of each partner: LG is a major producer of CD drives, while Hitachi, having largely finished CD-based device development and production, is now a leading manufacturer of PC DVD drives.
The market for such products is estimated to be 200 million units per year, according to research cited by each company, and they expect sales to reach 2.3 trillion won ($US2.1 billion) in 2001 and 3 trillion won in 2003.