Silicon Valley has a well-deserved reputation for having a Midas touch when it comes to turning technology into money. Much of that success is credited to an entrepreneurial culture that fosters startup companies. Hoping some of the magic rubs off, Panasonic plans to open a 20,000-square-foot incubator next month in Cupertino, Calif., that will house some 15 to 20 startups. To go along with its Panasonic Digital Concepts Center, the company will also set up a $50 million venture capital fund to support the firms.

The incubator is the result of a decision made two years ago, when Panasonic, the consumer electronics arm of Japan's Matsushita Electric, decided it needed to get a grip on the much-heralded "convergence" of TVs, personal computers and telephones-all of which Panasonic manufactures. The company's first thought, says Paul Liao, Matsushita's chief technology officer in the United States, was to build a corporate R&D center in Silicon Valley. But, says Liao, "we realized that the Valley is not so much about R&D as it is about venture startups. They are the new way of doing R&D."