Toshiba Corp. and Mitsubishi Electric Corp. said Friday that they have agreed to set up a joint venture in April to integrate their electric power transmission and distribution businesses.
The venture, to start operations Oct. 1, is expected to become one of the top three companies in the field in the world, the two electronics giants said.
Its operations will cover development and manufacturing, as well as sales and maintenance of power-related equipment, including high-voltage switch-gears, transformers and computerized control systems.
Toshiba and Mitsubishi Electric will hold equal stakes in the venture. It will be capitalized at between 40 billion yen and 50 billion yen and will receive about 2,700 employees from the parent firms.
Its sales goal for the 2003 business year is 150 billion yen, about 40 percent of which is expected to be generated through overseas operations.
Mitsubishi Electric President Ichiro Taniguchi and Toshiba President Tadashi Okada said the integration will increase management and efficiency, and speed up product development.
Toshiba and Mitsubishi Electric formed a comprehensive alliance in October 2000 to better compete with other global players.
But the business environment is deteriorating. Domestic electric power suppliers are shaving their investments in power equipment amid the economic slowdown. In addition, price competition in the global market has intensified since European companies regrouped, officials of the two companies said.
Each of the two firms were earning about 100 billion yen in annual sales from power-related operations a few years ago, but the amount is expected to decrease by 20 percent to 30 percent this year.