Hitachi and NEC are creating a joint venture company to target the high-end router/switch market, aiming in particular at telcos, government and large companies.

The company - as yet unnamed - will be established in October this year, based in Tokyo, staffed with 350 staff coming from both companies and will have capital of 5.5 billion yen (£28m). Hitachi will own 60 percent of the venture, NEC the rest.

The joint venture will supply backbone routers and switches to Hitachi and NEC for them to sell on to their own customers, said Isao Ono, executive vice president of Hitachi, at a Tokyo news conference. It will also sell the products through distributors under its own brand name and could supply them on an OEM basis to other network equipment vendors.

The first product is expect to ship before March next year and has budgeted annual sales of ¥40 billion (£204m) for the first year.

The primary market for the joint venture, at least initially, will be Japan, said Ono. The company expects to sell around 90 percent of its products domestically and is targeting a market share of around 30 percent.

The joint venture will help both companies speed up how long it takes to develop and sell new products, said Kaoru Yano, senior executive vice president of NEC. The network equipment market is very competitive and time-to-market is very important, he added.