Hitachi Ltd. said Monday it has reached an agreement with General Electric Co. to strengthen ties in nuclear power plant business by setting up joint ventures in Japan and the United States.
The joint company in Japan will be owned 80 percent by Hitachi and 20 percent by GE. The venture in the U.S. will be owned 40 percent by Hitachi and the rest by GE.
The new Japan company will manage the domestic market while the one in the U.S. will handle the global market, Hitachi said.
The two companies will start working on the specifics of the alliance in hopes of reaching a final agreement by June.
The move, which follows Toshiba Corp.'s acquisition of U.S.-based nuclear power plant maker Westinghouse Electric Co., is sure to accelerate consolidation in the global nuclear power plant industry.
Nuclear reactors can be categorized into two types -- boiling water reactors (BWR) and pressurized water reactors (PWR).
Hitachi and GE have been working together in the development of BWRs for about 40 years.
"Hitachi and GE will strengthen our partnership . . . to leapfrog the global competition as the world's leading companies in BWR and to advance our skills together through technical innovation," Hitachi President Kazuo Furukawa told a joint news conference with GE.
Hitachi said global demand for nuclear power plants is rising, with about 100 plants scheduled for construction worldwide in the next 20 years.
The demand is especially strong in the U.S., where 25 nuclear reactors are due to start operation by 2020.
Furukawa said Hitachi and GE hope to win one-third of the contracts for the 25 reactors planned in the U.S.
Hitachi's nuclear power plant section, which has about 2,000 employees and earns some 160 billion yen in annual revenue, will be transferred to the new company to be set up in Japan.