The two firms, laggards in the market dominated by giants like Hitachi Ltd and NEC Corp, will combine their strengths and aim to raise combined sales to around seven billion yen ($56.80 million) in three years from about four to five billion yen at present, they said. The first product will be supplied to Kawasaki Heavy Industries Ltd.

They expect Japan's market for factory information systems to grow more than 10 per cent over the next few years as manufacturers step up investment to boost efficiency and cut costs. Shares in Toshiba rose 6.44 per cent on Monday to close at 810 yen, outperforming the benchmark Nikkei 225 average, which gained 4.9 per cent. A recovery in memory chip prices as well as stronger US and European high-tech stocks helped to perk up Toshiba share prices.