(AFP) – Feb 19, 2008
TOKYO (AFP) — Japan's Toshiba said Wednesday it had agreed to pay 835 million dollars for Sony's high-performance semiconductor operations, just a day after surrendering to its rival in a bruising DVD format war.
Despite being fierce competitors in other areas, the two companies said they had firmed up a deal to form a semiconductor joint venture owned 60 percent by Toshiba Corp. and 40 percent by Sony Corp.
Toshiba will pay 90 billion yen for its rival's operations in western Nagasaki prefecture making advanced semiconductors, including the brains inside Sony's PlayStation 3 video game console, a joint statement said.
Toshiba will then loan the chip lines to the joint venture, which will start operating in April.
Sony first announced in October a basic agreement to sell the chip facilities to Toshiba as part of efforts to streamline its operations.
Under its first foreign boss Howard Stringer, Sony is seeking to shed non-core assets and revive its mainstay electronics business amid brisk sales of flat-panel televisions and digital cameras.
The sale of the chip lines also aims to reduce the cost of producing the PS3 as Sony struggles to recoup its huge investment in the console, which is facing fierce competition from Nintendo's Wii.
Toshiba meanwhile is looking to increase its focus on other growth areas such as production of semiconductors, including memory chips used in portable music players.
The announcement came just a day after Toshiba confirmed it would pull the plug on its high-definition DVD business, conceding defeat to Sony in a long-running battle to set the industry standard.
Toshiba said it would stop selling its HD DVD machines by the end of March, clearing the way for the Blu-ray format developed by Sony and its partners to dominate the next-generation market.
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