The Japanese government said on Wednesday it plans to help fund the joint development of next-generation routers, devices that control traffic on the internet, in a programme reportedly involving major chip makers NEC and Hitachi.
The government wants to boost the competitiveness of domestic telecoms equipment makers in the router field, currently dominated by firms such as Cisco Systems of the United States, a trade ministry official said.
The Nihon Keizai Shimbun reported earlier that NEC and Hitachi will each invest five-billion yen ($46,7-million), while the Ministry of Economy, Trade and Industry will contribute 10-billion yen toward development costs over a three-year period starting in April 2004.
The three sides could forge a joint venture to develop the devices, with first sales envisaged by the end of 2006, it said.
The trade ministry has applied for funding for the project to be included in the budget for the next fiscal year that starts in April but details have yet to be worked out, said ministry official Ikuo Takahashi.
”The market for communications networks systems is expanding, with homes nowadays having several personal computers. Routers are central to these networks but there are very few domestic producers,” he said.
Takahashi said the project may involve more than two companies but declined to name any participants.
NEC spokesperson Makoto Miyakawa said the firm is ”considering wide-ranging tie-ups in the telecommunications field” but that nothing had been decided.
Hitachi spokesperson Emi Takase called the newspaper report ”speculative”, saying she was unable to provide any information about the project.
Japanese companies hold a less than five percent share of the global router market, the Nihon Keizai said.
Demand for next-generation routers with transmission speeds of 300 gigabits per second is expected to surge around 2006 in Japan and a few years later overseas, it said.
Both NEC and Hitachi share prices fell on Wednesday but outperformed the Tokyo Stock Exchange’s key Nikkei-225 index, which fell 1,74% to close at 10 092,64.
NEC fell five yen or 0,67% to 745 yen while Hitachi dropped five yen or 0,79% to 629 yen. – Sapa-AFP