Casio Computer Co. and Hitachi Ltd. announced Tuesday they will set up a joint venture in April to develop cell phone handsets.
The companies said the tieup is necessary to survive the rapidly evolving handset market and escalating development costs, as well as to boost their overseas business.
The new company will be capitalized at 3 billion yen, with Casio taking a 51 percent stake and Hitachi the remainder.
It will be tasked with development, design and material procurement, but production will be handled by the two companies' subsidiaries.
Casio and Hitachi will sell handsets separately under their own brands.
Officials of the two companies said the new firm will roll out its first handsets in fall 2005, adding the two will continue to develop products already in the pipeline.
Both Casio and Hitachi are handset suppliers for KDDI Corp.'s au network. Projected sales of their mobile handset business for the current fiscal year is 80 billion yen for Casio and 50 billion yen for Hitachi, according to the officials.
The firms explained that the integration of their development operations is necessary to shoulder mounting costs, as handsets are adding various features such as still and movie camera functions.
The cost burden is likely to increase as carriers start high-speed wireless services. KDDI will launch CDMA 1X WIN later this month, which boasts data communications of up to 2.4 megabits per second.