Under the deal, to be announced in the summer, they will develop missiles, radar and other defense equipment and share technologies, the Yomiuri Shimbun said.

Mitsubishi, Japan's number three supplier of defense products, and Lockheed Martin, the world's biggest defense equipment maker, will take product orders from the Japanese government, the daily said.

With the tie-up, the two hope to expand their market shares in Japan and increase their competitiveness and technological capabilities, it said.

The tie-up will mark an unprecedented corporate alliance between Japan and the United States since defense deals are uncommon because of the issue of military confidentiality, it said.

Lockheed Martin is aiming at boosting its foreign market share as Washington has cut back its military budget since the end of the Cold War.

And Japanese defense equipment makers are also struggling to keep their plants amid shrinking defense budgets, the daily said.

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