Taipei, Nov. 21 (CNA) Rhythm & Hues Studios (R&H), one of the world's top five visual effects companies, signed a memorandum of understanding (MOU) with Taiwan's top telecom operator Wednesday to set up a joint venture to make Taiwan a cloud computing hub.

Chunghwa Telecom and R&H already have a data center in Taipei that they said will be used as the foundation of their joint venture.

The project, called Cloud for Animation and Visual Effects (CAVE), will play an important role in meeting the growing demand for cloud computing services in the global visual effects market, said Prashant Buyyala, managing director of international facilities at Los Angeles-based R&H.

R&H will gradually put all the computing power of its six visual effects studios worldwide into one cloud, Buyyala said on the sidelines of a press briefing.

"The goal is, over time, each of the company's local data centers will become smaller or completely disappear, and CAVE will become the hub," he said.

R&H will expand the scale of the project, now in the early stages, and will invest more in the infrastructure of CAVE, he said.

"The larger CAVE becomes, the more aggregation there is, the more cost effective it becomes for everyone," Buyyala said, adding that the studio his company set up in Kaohsiung earlier this year stands out an example of operating "in the cloud" without any data centers.

Chunghwa has expertise in hardware and large-scale service operations, while R&H is good in software and highly knowledgeable about the movie industry, Buyyala said, and he believed that combining the strengths of the two companies will make CAVE successful.

Chunghwa Chairman Lu Shyue-ching said the project can also help propel Taiwan's hardware and technology into a leading position in the industry.

"It is the first time a Hollywood company has partnered with a telecom operator, and signing the MOU shows the determination of both the companies," said Lu, who declined to reveal how much his company has invested in the project.

The goal is to establish Taiwan as the top provider of computer services for Hollywood and the global digital content industry, he said.

Asked if other information technology companies will join the effort, Chunghwa Telecom Senior Vice President Lee Yen-sung said it was a strong possibility but he declined to identify any other companies that have expressed an interest in taking part so far.