Sony Corporation (hereafter Sony) and NEC Corporation (hereafter NEC) have concluded a Memorandum of Understanding (MOU) aiming to establish a Joint Venture company in the optical disc drive business. Sony and NEC will work together from now to reach agreement on a final contract. The new company will aspire to become the leading company in the optical disc drive sector.

Sony will hold a 55% stake in the new company while NEC's stake will be 45%. Sony and NEC will make preparations to transfer their respective optical disc drive operations to the Joint Venture, targeting a business start on April 1, 2006. The Joint Venture will focus on the planning, design, manufacturing and marketing to manufacturers of optical disc drives (DVD and CD drives) for integration into products such as PCs. The company will operate on a global basis.

The new company will pool the best in optical disc drive technology (e.g. NEC's strengths in LSIs and Sony's expertise in optical pickups) to deliver high quality and reliable products to consumer electronics and PC makers on a timely basis.

• Sony's President and Electronics CEO, Ryoji Chubachi commented:
  Optical disc drives are key components for a broad range of devices and we are strategically focusing our development resources in this sector. By teaming with NEC which has excellent technology in areas such as DVD drives, I believe we can work effectively to enhance our product lineup and quality on a global scale.
• NEC's President Akinobu Kanasugi, commented:
  The market for high value-added drives to be integrated into PCs and consumer electronics products is rapidly expanding. I believe we have made the best choice in partnering with Sony with whom we can build a total value chain covering procurement of key components, production and marketing. This will allow us to realize the aim of becoming the top vendor in this sector.

• Capital
  Amount to be determined (Sony will have a 55% stake, NEC will have a 45% stake)
• Operational Start
  Planned for April 1, 2006
• Scale of Business
  In FY04, the optical disc drive businesses of both companies combined generated about 220 billion yen.
• Executives
  Sony will designate the President while NEC will designate the Vice President of the company.