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Thursday, March 4, 1999 Published at 17:53 GMT

Business: The Company File

Video games giants declare war

Lara Croft: Her Tomb Raider video game is a firm favourite

Japanese electronics giants Sony and Toshiba have united to produce the computer chip powering the latest version of the popular PlayStation video game.

Rivalry between video game manufacturers is fierce. But it is hoped the new 128-bit processor will give the two companies the edge, providing faster responses to commands and more lifelike images.

It will also offer four times the power of Sony's current PlayStation, and twice as much as competitor Nintendo 64. Arch-rival Sega's Dreamcast game player, sold only in Japan, also uses a 128-bit chip.

Toshiba will hold 51% of the new firm and Sony Computer Entertainment, a Sony subsidiary, will hold the rest.

[ image: PlayStation: A potential rival for Dreamcast]
PlayStation: A potential rival for Dreamcast
Toshiba president Taizo Nishimuro said: "We can't do everything by ourselves, good alliances are important. By sharing revenue and risk together we will face a bright future."

Sony's president Nobuyuki Idei described the union as an "an epoch-making event".

PlayStation is the most profitable part of Sony's business, and it is hoped the new version will trounce its Dreamcast rival.

Sony has said it will also spend 70bn yen ($574m) to set up its own company for the game in April. The new firm will produce the main graphics processor for the new PlayStation.

Markets targeted

The chip will be manufactured on Toshiba's production lines in autumn.

Sony Computer Entertainment also said it will invest 50bn yen ($410m) in new equipment for the joint venture. Toshiba will provide the production lines, based 800km south of Tokyo.

Both plants will produce 10,000 eight-inch silicon wafers a month, each carrying several of the chips. The chips will allow Sony to work on new games and other products.

Sony will begin selling the new game, the PlayStation II, by March 2000 in Japan. It will hit the US and European markets a few months later.

The company said in January it expects worldwide sales of the PlayStation to total 3.28 million units for the fiscal year.

More than 50m consoles have been sold around the world since its launch in 1984.

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