Japanese telecommunications group NTT announced Thursday that it would invest 64.5 billion yen ($597 million) for a 4.8 percent stake in IT services group NEC to launch what both companies called a "made-in-Japan" alliance in 5G technology.
The deal will make NTT, which owns Japan's largest telecommunications carrier, the third biggest shareholder in NEC. The partnership will also give both companies an opportunity to catch up with Chinese equipment makers at a time when those entities are under global political pressure.
"While the U.S.-China relations may become extremely difficult, there is an opportunity to make globally competitive products and systems from Japan," NTT CEO Jun Sawada said in a news conference on Thursday. The two companies plan to develop equipment for fifth-generation core networks.
The tie-up was first reported by Nikkei on Wednesday.
The partnership comes as China's Huawei, a leading telecommunications carrier and equipment manufacturer, is embroiled in political turmoil between Washington and Beijing. On Wednesday, Singapore's three biggest telecommunications companies said they chose Sweden's Ericsson and Finland's Nokia as main equipment suppliers for their 5G networks.
NEC has a mere 0.7% share of the networking equipment market which is dominated by European and Chinese players. It aims to boost its share to 20% by 2030 by building an alliance of partners in an industry where "vertical integration" -- a strategy in which a single company controls the entire supply chain -- is the norm.
