US software giant Microsoft and South Korea's top automaker Hyundai Motor have forged a deal jointly to develop a new in-vehicle music and entertainment system, officials said Tuesday.

Hyundai officials said Microsoft head Bill Gates would attend a ceremony later in the day at which the deal would be signed.

Gates is in Seoul to attend the annual Seoul Digital Forum.

Microsoft and Hyundai will jointly establish an auto IT innovation centre, the Korean company said.

Over the next five years, Hyundai will invest a total of 166 million dollars to bring IT technology advancements into the car and to develop new in-car services, it said. Microsoft will invest 113 million dollars.

For years, Microsoft has been trying to expand its software dominance beyond offices and homes.

"These new systems will redefine consumer experiences in the car," Martin Thall, general manager of Microsoft's automotive business unit, said in a statement released by Hyundai.

"We're now aligned to develop the next generation of in-car infotainment systems," he added.

Hyundai said the system would be controlled by the driver's voice and linked with other handheld digital devices such as mobile phones and MP3 music players.

It said the deal would help Hyundai upgrade its brand awareness abroad.

The Hyundai group which includes affiliate Kia Motors controls 70 percent of the country's auto market and accounts for 5.4 percent of gross domestic product.

It aims to become the world's number five carmaker, from number six currently.