Matsushita Electric Industrial Co. and Hitachi Ltd. formally announced Wednesday an alliance to promote businesses centering on information services and home appliances.

In their first collaborative project, the electronics giants will start developing technology and products on integrated circuit card solutions, home networking appliances, and so-called white appliances, such as refrigerators and washing machines.

Hitachi President Etsuhiko Shoyama said the partnership will help the two firms win intensifying global competition by developing and marketing next-generation products faster than any other competitors.

"As Matsushita and Hitachi have complementary technologies, this deal will enable us to produce quality products at low costs and increase our profitability," he said.

The two companies will soon set up a joint project for development of IC card solutions, including applications, IC card terminals and financial systems, they said.

They will also create a joint venture by the end of this year to produce home networking systems, which connect electronic appliances to each other and the Internet.

To reinforce white appliances business, Hitachi and Matsushita will innovate technology to increase energy efficiency and the recycling of components for such products as refrigerators and washing machines.

Matsushita President Kunio Nakamura said the two firms will market new home networking products in 2003 and new white appliances in 2004.

The two companies will also conduct joint procurement of materials and components for their global operations, which will contribute to considerable cost-cutting, Shoyama said.

In addition to these projects, the giants are considering further collaborations in the digital audio visual and semiconductor areas, the presidents of the two firms said.

Manufacturing systems of jointly-developed products and other cooperative projects will be discussed later, they said.

With electronics companies investing heavily in the development of digital products and environment technology, partnerships with competitors have increased in recent years.