NEC, Matsushita Electric Industrial, and Texas Instruments partnered together Thursday to create a joint venture that will develop hardware and software for third-generation mobile phone chips.

The alliance also involves NEC’s subsidiary NEC Electronics, and Matsushita’s subsidiary Panasonic Mobile Communications, so it is a five-way partnership.

The joint venture will be known as Adcore-Tech and will be set up in August in Yokosuka, Japan, with about 180 employees. It will begin operations in September.

The five companies are investing a total of ¥12 billion ($103.9 million) in the joint venture. NEC and NEC Electronics will hold about 44 percent of the company, while Matsushita and Panasonic Mobile will hold another 44 percent, and TI will control 12 percent.

NEC shares rose $0.17 to $5.13 in recent trading, while Matsushita shares climbed $0.63 to $20.52, and Texas Instruments shares increased $0.47 to $29.90.

Proving Ground

The companies aim to develop technology for cell phones that will be able to integrate music, video, broadcasting, and high-speed Internet communications. Japan has been a proving ground for so-called 3G mobile technology.

NTT DoCoMo recently upgraded its 3G networks in the Tokyo region tenfold to 3.6 megabits per second on the download side using HSDPA (high-speed downlink packet access) technology, according to Eurotechnology Japan.

“This is all about us working with our customers to foster the development of advanced technology solutions for Japan,” said Gail Chandler, a spokesperson for Texas Instruments. “That is an important 3G market for us. 3G is more prevalent today in Japan than elsewhere, but that’s changing. Other regions are coming on with 3G as well.”

The five companies behind the Adcore-Tech venture anticipate that phones will be available by the fall of 2007 using the communications technology they develop.

They will license their own communications technology to Adcore-Tech, while Adcore-Tech will license its communications chip technology to NEC Electronics and Texas Instruments. Meanwhile, NEC and Panasonic Mobile will incorporate the chips into their mobile phones.

NEC Electronics and TI will sell the chips to cell phone makers in Japan and around the world. Adcore-Tech will also license its communications technology, software, system evaluation services, and customization services to other mobile phone makers.

The “NEC, Matsushita, and TI cooperation is only halfhearted,” said Gerhard Fasol, chief executive of the consulting firm Eurotechnology Japan. “NEC and Matsushita will continue to market their phones separately, so I think there is still a long way to go.”

Second JV for Phone Making

In addition to that joint venture, NEC, Matsushita Electric Industrial (MEI), and Panasonic Mobile Communications said Thursday they were setting up an as-yet-unnamed joint venture to develop the mobile phones themselves, along with the software for them.

They are investing ¥100 million ($865,937) in the joint venture. NEC and Panasonic will each hold 50 percent stakes in this joint venture, which will be based in Yokohama, with about 140 employees.

“NEC and MEI have announced they are to set up a joint venture developer of mobile phone handsets,” Merrill Lynch research analyst Hiroshi Yoshihara wrote in a research note. “Capitalized 50-50, it will be an equity method affiliate for both companies.”

He noted that some of the development burden for the phones will be shifted to the new affiliates, but the majority of the development group will still remain at the parent companies.

Contact the writer:MCohn@RedHerring.com