The joint venture with its headquarters in Japan will be owned 51 percent by Toshiba Corp. and 49 percent by Samsung Electronics Co. Ltd., the two firms said in a statement.

It will set up a wholly-owned subsidiary in South Korea to control operations there, the statement said.

It added that Toshiba and Samsung on Monday signed a memorandum of terms on the alliance but they have yet to finalise such details as the start-up date and capital of the joint venture.

The project will bring together product and business planning, product development, procurement and sales for optical-disk drives (ODD), including CD-ROM and DVD-ROM drives.

"The scale of the combined operation will position the joint venture among the world leaders in the ODD business," the statement said, citing combined ODD sales of more than 200 billion yen (1.8 billion dollars) in 2002.

"The optical-disk-drive business faces fast changing customer requirements for faster, slimmer drives, and a rapid transition in the main product to recordable DVD drives.

"Price erosion and alliances are also making themselves felt and further intensifying competition. In this environment, advantages in technology, product development and price competitiveness are all crucial for survival," it added.

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