Hitachi, NEC get govt aid for next-gen routers

TOKYO: Japanese electronics conglomerates NEC Corp and Hitachi Ltd plan to team up to develop next-generation routers for high-speed Internet connections, the Nihon Keizai newspaper said.

The two companies will receive support from the Japanese government in a 20 billion yen ($186 million) project aiming to commercialize the routers -- devices that direct data on networks -- by the end of 2006, the paper said. Japan's Ministry of Economy, Trade and Industry (METI) is expected to chip in 10 billion yen ($92.98 million) while NEC and Hitachi will invest five billion yen each, it said.

An NEC spokesman said the two companies were considering cooperating in the telecom business but no decision had been made. Hitachi officials were unavailable for comment.

NEC holds the top market share in Japan's telecoms equipment market, but Japanese firms have a weak presence in the global router market, which is dominated by Cisco Systems Inc.

The two companies will likely establish a joint venture to develop the routers, the Nihon Keizai said.

NEC and Hitachi have already teamed up in memory chips, and spun off those operations in December 1999 into the Elpida Memory joint venture, which focuses on high-end DRAM (dynamic random-access memory) chips used in computers and servers.

NEC shares were down 1.73 percent at 737 yen as of 0024 GMT, while Hitachi was up 0.16 percent at 635 yen.

The benchmark Nikkei average was down 0.35 percent.

Reuters