“Toshiba is an ideal partner because of their early start in 45-nanometer process technology development, as well as their previous experience with various kinds of collaborations. By working together, we hope to achieve faster development times and reduce our development costs, which will ultimately help our customers bring more advanced products to market quickly,” said J.J. Yamaguchi, executive vice president of NEC Electronics.

NEC Electronics proposed the alliance to Toshiba some time around September. NEC Electronics reported an operating loss of 12 billion yen (about $103 million) in the first half of this fiscal year ended September 30. Kaoru Tosaka, president and CEO at that time, took responsibility for the performance and resigned on the day of the business result announcement (see Oct. 26 story).

“It's the beginning of the semiconductor industry reorganization,” said Yoshihisa Toyosaki, president of iSuppli Japan K.K. “Even the two companies jointly develop technology together, what they will make? They need to establish a successful business model.”

Toshiba and Sony Corp. have already begun sharing the development of 45-nm generation process technology. Thus today's joint development agreement means that NEC Electronics is set to join the Sony/Toshiba team working at Toshiba's Advanced Microelectronics Center in Yokohama.

Toshiba and NEC Electronics said that they intend to integrate process technologies they have previously developed individually but it is the first time the two rival companies have worked together on process development. The two companies therefore have some differences of approach. In the area of embedded memory, Toshiba uses trench capacitor memory while NEC Electronics uses stacked capacitor memory.

Having agreed on sharing the development of 45-nm process the discussions on a compressive alliance on system-on-chip products, covering design environment, product development and also manufacturing collaboration, would now begin, a spokeswoman said.

Both Toshiba and NEC Electronics are producing system-chips using 90-nm manufacturing processes and neither company has migrated to the 65-nm generation yet, although in each case 65-nm process development has been completed, according to company spokesmen.