NEC Corp. and Hitachi Ltd. said Thursday they will not participate in the manufacturing phase of a government-led project to develop next-generation supercomputers so they can cut costs amid deteriorating business conditions.

NEC, which incurred a group net loss of ¥296.65 billion in business 2008, which ended in March, would shoulder over ¥10 billion in research and development costs if it continued to participate in the project.

Hitachi, another key member of the project facing tough times, followed suit later Thursday, announcing separately that it will exit the supercomputer project.