The companies will now develop 32-nm processes at the site, with the aim of accelerating development and sharing development costs. The development of derivative and differentiated process technologies will be discussed separately by the two companies.

Seeking to stay ahead of the curve in ASICs, game-machine devices and other products, NEC Electronics has recently rolled out a 40-nm logic process that includes a pair of embedded DRAM technologies.

The 40-nm process makes use of a one-two punch: hafnium-based high-k dielectric materials and nickel-silicide gate electrodes. This process, to be shipped in the 2009 time frame, also uses zirconium-oxide DRAM capacitors.

Volume production of 40-nm devices is scheduled to begin by the end of the next fiscal year at NEC Electronics' 300-mm wafer line in Yamagata. Its next fiscal year ends March 31, 2009.

It's unclear if that fab can extend to the 32-nm node. And it also appears that Toshiba has the technical muscle -- and capital -- to build a 300-mm fab that supports 32-nm processes.

Could the two companies devise a fab venture at 32-nm and beyond? It's possible, with Toshiba taking the lead role in the effort, observers said.

Toshiba is making huge profits, thanks to its efforts in NAND flash. The company is also already in production with a 45-nm logic process within its fabs in Oita, Japan, said Shozo Saito, corporate senior vice president for Toshiba (Tokyo) and the president and CEO of Toshiba's Semiconductor Company.

''We already have a 45-nm logic process in Oita. Oita is an LSI logic fab. We are starting [with a 45-nm] high-performance process called HP. We are developing a low-power process for 45-nm,'' Saito said in a recent interview. ''We use 45-nm mainly for our own products [such as] system LSIs.

While it ramps up its NAND flash fabs, Toshiba is also expanding its logic fab base. Recently, troubled Sony Corp. took a major step away from IC manufacturing, by transferring its advanced fab lines to Toshiba in a stunning and complex deal.

As part of the deal, Toshiba, together with Sony and Sony Computer Entertainment Inc., have establish a joint venture that will produce high-performance semiconductors, including the ''Cell'' processor and the RSX graphics engine.