TOKYO (Reuters) - Japan's Toshiba Corp. and NEC Electronics Corp. will join hands in developing next-generation chip technology to speed up the process and limit costs, the companies said on Wednesday.

Toshiba, the world's seventh-largest microchip maker, and eighth-ranked NEC Electronics also said they had begun talks on further collaboration including product development and production to make capital investment more efficient.

"As advances in semiconductor process technologies become more complex, time consuming and expensive, the joint development will allow the companies to share burdens and accelerate development, while raising system LSI performance and quality," they said in a joint statement.

Chip makers are now trying to move to chip circuitry widths of 90 nanometres, or billionths of a metre, as advanced design provides smaller and higher-density chips at lower unit costs.

Toshiba and NEC Electronics, 70 percent owned by Japanese electronics conglomerate NEC Corp. will together develop process technology for chip circuitry widths of 45 nanometres.

NEC Electronics last month reported a first-half loss and forecast a deeper full-year deficit than expected as its microchips used in digital electronics products such as DVD recorders come under heavy price pressure and cellphone chip sales fall sharply as the domestic market for high-end mobile phones becomes saturated.

Toshiba, on the other hand, posted a 46 percent rise in quarterly profit, boosted by booming flash memory chip demand and improved PC operations, and signalled it might upgrade its full-year forecast.

Toshiba is benefiting from growing demand for NAND-type flash memory, a storage device widely used in digital cameras, photo-snapping phones and portable music players such as Apple Computer Inc.'s hot-selling iPod nano.

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