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Toshiba, Samsung Enter Joint Disk Drive Pact

Two consumer tech giants Monday outlined plans to join forces in the optical-disk-drive business.

Tokyo-based Toshiba and Seoul, Korea-based Samsung Electronics signed a memorandum of terms that will combine their respective optical divisions into one new concern. The two are now in the incorporation planning process.

The new joint venture will bring together product and business planning, product development, procurement and sales for optical-disk drives (ODD), including CD-ROM and DVD-ROM drives. The new company will be 51 percent owned by Toshiba and 49 percent owned by Samsung Electronics and consolidated by Toshiba. The companies say the JV will be headquartered in Japan, while its wholly owned subsidiary established in Korea will control operations there.

The combined operation is expected to make the joint venture among the world leaders in the ODD business. With 2002 annual sales exceeding 200-billion yen, the two companies say they anticipate more collaboration in the future to advance its global position.

"The optical-disk-drive business faces fast changing customer requirements for faster, slimmer drives, and a rapid transition in the main product to recordable DVD drives. Price erosion and alliances are also making themselves felt and further intensifying competition. In this environment, advantages in technology, product development and price competitiveness are all crucial for survival," the companies said in a prepared statement.

The new venture does not appear to be impacted by Toshiba's faltering notebook PC business. Japan's largest semiconductor maker recently raised its half-year net loss estimate by 67 per cent and said it would layoff about 500 workers.