Toshiba and NEC Electronics will work together on advanced chip manufacturing technologies to help them continue the steady miniaturization of consumer electronics products.

The companies will develop technologies for fabricating system LSI (large scale integrated circuit) chips with features as small as 32 nanometres, they announced Tuesday. The chips typically bring together functions previously handled by several individual chips, and their development is vital to the continuing miniaturization of MP3 players, phones and other electronics gear.

The agreement extends the collaboration between Toshiba and NEC Electronics, which have worked together since February last year on a 45 nanometre production process. The figure refers to the smallest features etched onto the surface of a silicon chip, and one nanometre is equal to about a billionth of a metre.

Each advance in chip manufacturing allows either smaller chips to be made, or more components to be squeezed onto each chip. The result is usually more powerful chips that consume less electricity - both key features for portable electronics devices.

The 45 nanometre work, taking place at Toshiba's Advanced Microelectronics Center in Yokohama, is approaching its end, said Sophie Yamamoto, a spokeswoman for NEC Electronics. The 45-nanometre project also involved Sony under a separate agreement reached with Toshiba in 2004. Sony will not take part in the 32-nanometre work because of efforts to cut its costs.

Toshiba and NEC Electronics also continue to discuss the possibility of joint manufacturing, they said. Chip production plants cost billions of dollars to build, and the price is rising as more advanced technologies are introduced. Several other chip makers have already agreed to joint manufacturing as a way to cut costs and reduce risks.