Japanese electronics heavy-hitters Sony and NEC are to establish a joint venture company to design and manufacture CD and DVD drives.

Sony will hold a 55% stake in the new company while NEC's stake will be 45%.

The new company will pool NEC's strengths in IC development and Sony's expertise in optical pickups; NEC and Sony will transfer their respective optical disc drive operations to the new company, which plans to open its doors on April 1 next year.

In 2004, the optical disc drive businesses of both companies combined generated about $1.8 billion.