Toshiba and NEC are forging ahead with plans to jointly develop manufacturing technology for 32 nanometer chips to better compete with rivals.

The two giants plan to embark on their joint efforts as early as the start of 2008, with mass production beginning in 2010.

In July, rumors circulated of a pact between the Japanese heavyweights. Those earlier reports, however, included Fujitsu as part of the alliance. It now looks like Fujitsu may have grown cautious of the agreement and dropped from the chip making confederacy.

According to Japanese business newspaper Nikkei, Toshiba and NEC are willing to go it alone — although they remain in negotiations with Fujitsu to keep the partnership going.

With or without Fujitsu, the two would join competitors that have already partnered to offset the massive development and production costs required to make chips with minimum circuit features at 32 billionths of a meter. According to VLSI Research, the cost of adopting the new process node can run as high as $4bn.

The pressure is on from Intel, which expects to begin production of 32nm chips in the 2009 time-frame.

NEC is expected to turn over the production of 32nm chips to Toshiba's factory in Oita, rather than equiping its own factory for fabrication. Toshiba and NEC have already worked together on the development of 45nm chips, which could reach mass production as early as next fiscal year.

In May, IBM entered an alliance with Samsung, Chartered, Infineon and Freescale to foster their own 32nm technology. That gang has since been joined by STMicroelectronics. ®

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