TOKYO--Japan's two largest chipmakers, Toshiba and NEC, said on Tuesday they have agreed to jointly develop next-generation memory chips that reduce power consumption to compete with overseas rivals.
Under the deal, Japan's top two chipmakers will develop a new kind of memory device, magnetic random-access memory (MRAM) chips, which substantially increase the length of time notebook personal computers and mobile phones can operate on a single battery charge.
"By forming a partnership with Toshiba, we would like to accelerate the speed of development and contend against our overseas rivals," an NEC spokesman said.
Japanese chip conglomerates have been trying to improve their position in the global market by sharpening their focus and pooling resources.
The new chips are expected to cut power consumption, retain data when the power is turned off and allow users to erase and re-enter data almost indefinitely.
A Toshiba spokesman said the two companies aim to complete the development of MRAM chip technology by March 2005, but they would not cooperate on commercializing the technology.
He declined to disclose the financial terms of the deal, although business daily Nihon Keizai Shimbun reported on Sunday that the two firms plan to invest more than 10 billion yen ($81.81 million) in development by spring 2005.
Shares of NEC rose 2.33 percent to 615 yen by midday on Tuesday, while Toshiba shares rose 1.53 percent to 399 yen.
The benchmark Nikkei average was up 3.08 percent.
Potential market
NEC and Toshiba have already set up a joint task force with 20 engineers from each firm and aim to establish a prototype production line at NEC's plant in Sagamihara, near Tokyo, by the year-end.
The Toshiba spokesman said annual demand for MRAMs as a replacement for current commodity memory chips, such as DRAMs or flash memories, is expected to reach 1.0 trillion yen by 2007.
A number of major overseas chipmakers are also working on MRAMs.
The Nihon Keizai said U.S. semiconductor maker Motorola Inc has already developed a prototype lower-capacity MRAM, and International Business Machines Corp and Infineon Technologies AG I of Germany have begun joint development.
Both NEC and Toshiba have already tied up with other Japanese chip makers to combat a stubborn global slump in the high-tech market.
Toshiba is mapping out a system chip alliance with Fujitsu, Japan's fifth-largest chipmaker, and an initial framework for cooperation is due by mid-September.
NEC has had a 50-50 joint venture, Elpida Memory, with electronics giant Hitachi since 1999 to combine their DRAM operations.
