NEC Corp. and Toshiba Corp. announced Wednesday that they have agreed to integrate their space business operations by establishing a joint venture in April in an effort to boost their presence in the global aerospace market.

The new company, which will be based in Yokohama, will be capitalized at 7 billion yen, with NEC holding a 60 percent stake and Toshiba owning the rest. About 1,200 employees from the two companies will be transferred to the new firm over a period of six months, executives of the two companies said.

According to the two companies, the scope of the new firm's operations will range from consultation on space systems for spacecraft and rockets to the design, manufacture, sale and operations of satellites, space stations and related components.

The new firm will aim to earn 100 billion yen in sales in fiscal 2005, officials said.

Sales at NEC's space business currently stand at an annual 40 billion yen, while those of Toshiba stand at 20 billion yen. These figures leave the firms a distant second and third place behind the market leader, Mitsubishi Electric Corp., which has about 100 billion yen in annual sales.

During a news conference in which the move was announced, NEC President Koji Nishigaki and Toshiba President Tadashi Okamura said the new firm will consider forming partnerships with foreign companies in the future.

With the recent realignment of the space businesses in the U.S. and Europe, global competition in the aerospace market is intensifying at a rapid pace.

Although the 300 billion yen domestic space market -- largely dependent on public-sector demand -- remains flat, the 4 trillion yen overseas market is expected to grow in the wake of increasing demand for private-use satellites.

The move by the two firms is seen as an effort to secure full-fledged entry into this potentially lucrative market.

NEC's big sell-off

NEC Corp. is attempting to sell its mobile phone factories in Britain and Mexico so it can concentrate on designing and developing the products, company officials said Wednesday.

NEC is negotiating the sales of NEC Technologies (U.K.) Ltd. in Telford, West Midlands, and Tecnologias NEC de Mexico S.A. de C.V. in the outskirts of Mexico City with original equipment manufacturers, they said.

ecause mobile-phone prices have declined, the company has decided to outsource less-profitable production to improve efficiency.

ut the electronics giant will continue to produce mobile phones in China at Wuhan NEC Zhongyuan Mobile Communication Co.

NEC's mobile phone output in fiscal 2000 is estimated at around 13 million units, of which the combined output at the three overseas facilities account for 20 percent. In the previous fiscal year to March 31, its overseas mobile phone output was about 4 million.

Floppy-disk suit ends

LOS ANGELES (Kyodo) California said Tuesday that Toshiba Corp. has agreed to pay the state $30.13 million to settle a suit over personal computers with alleged defects sold to state agencies.

The state had argued that defects in floppy-disk controllers in Toshiba's PCs sold to the agencies could damage data.

California said it plans to use the settlement money as budgetary funds for such state institutions as the University of California and the board of education.

Toshiba said it will use a fund set aside for special losses last year to pay the settlement.