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Hitachi Ltd. and Mitsubishi Electric Corp. have agreed to pool their system LSI (large-scale integrated circuit) businesses in a joint venture company, they announced Monday.

The two companies will shift most of their LSI businesses, including microcontroller-based products for mobile, network, automobile and digital home appliance devices, to this joint venture, which is expected to be formed about a year from now, according to a statement issued by Hitachi and Mitsubishi Electric.

The two companies, both based in Tokyo, plan to establish a new brand name and develop, design and sell new system LSI products through a new company, which is likely to be equally owned by the two, said Etsuhiko Shoyama, president and chief executive officer (CEO) of Hitachi.

Hitachi and Mitsubishi Electric, two of the world's largest microcontroller manufacturers, see the joint venture as the only way to stay ahead of competition from China and Taiwan, Shouyama said.

"You can't imagine how tough it is to survive in the semiconductor industry," said Ichiro Taniguchi, president and CEO of Mitsubishi Electric. "When we see the IT industry in a long-term prospect, we know semiconductor business is vital. However, it will be risky to continue our business as an individual company," he said.

Hitachi and Mitsubishi already have partnerships in fields as diverse as flash memory and elevators. They expect the integration of their system LSI units will accelerate development of new products and increase the efficiency of their business management, according to Satoru Ito, CEO of Hitachi's semiconductor unit.

Mitsubishi Electric already has a system LSI development partnership with Matsushita Electric Industrial Co. Ltd, and Hitachi a partnership with STMicroelectronics NV to make microcontrollers.

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