Strategic alliance in electronic testing

Yokogawa Electric and Ando Electric have signed an agreement in which the companies will collaborate on business strategies for test and measurement and semiconductor test equipment

Yokogawa Electric Corporation and Ando Electric Co, two of Japan's leading instrumentation companies, have signed a partnership agreement in which the companies will collaborate on business strategies for their test and measurement and semiconductor test equipment product lines.

At the same time, NEC Corporation agreed to transfer 33% of Ando's issued shares to Yokogawa on the 28th February 2001.

NEC currently holds 35% of Ando's issued shares.

Last year Yokogawa announced a policy to accelerate sales growth in the measurement sector.

Ando has also set itself on a path to reinforcing development of its core business by investigating the formation of a strategic alliance with an industry partner, while NEC has focused on a reorganisation of its group-wide structure.

The alliance between Ando and Yokogawa will centre on Ando's measurement systems for optical communications, together with Yokogawa's test instruments for the development of communications networks and multimedia equipment.

It also covers areas in which both companies have been involved, such as ATE semiconductor testing and device handling systems, where the partners intend to offer a wide range of products and services to create greater customer satisfaction and global competitiveness as test solutions providers.

The collaboration in their ATE and measurement equipment businesses by the two partners is worth 130 billion Yen (1.1 billion dollars).

However, by taking advantage of the anticipated synergies created through their alliance and by focusing on the communications, multimedia, semiconductor and other growth areas, the two companies forecast this figure to reach 200 billion Yen (1.7 billion dollars) in 2005.

One highly anticipated synergy is the integration of Ando's world-class optical technologies and Yokogawa's compound semiconductor technologies in the development of next-generation high-speed, high-capacity optical communications equipment.

Another synergy will be in the mobile communications and Internet Protocol (IP) based data communications realm, where the combination of resources and technology at both companies is forecast to result in significant business growth.

In the ATE area, the strategic alliance between Ando and Yokogawa is expected to give them strong coverage and leading test solutions in all device testing fields, from mixed-signal devices to logic and memory devices.

Considering the increasing need for digital information in the coming IT society, the companies will focus on the development of test solutions for key enabling devices.

In the largest ATE market, memory devices, the partners will take advantage of Ando's leading high-speed test technology to enhance sales at both companies.

NEC, aiming to maximise the corporate value of the overall NEC Group by reviewing capital relationships, will sell all but 2% of its 35% holding in Ando to Yokogawa to promote business synergy.

NEC and Yokogawa enjoy a strong relationship based on their procurement of semiconductors and measurement equipment from each other, and NEC believes that an alliance between Ando and the world-leading Yokogawa will enhance business development at Ando significantly.

It is also seen as a means of continuing the close business relationship among the three parties.

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