Sony and Toshiba will each spend 10 billion yen (£50m) in a joint research project to make the PC processor of the future, the two companies have announced.

The deal is an expansion of an existing partnership in semiconductors but in an effort to leapfrog the market, both have made it clear they are attempting to produce 45 nanometre chips - half the size of today's very latest processors.

If successful, the resulting chips could be significantly smaller, faster and consume less power than today's cutting-edge semiconductors, said a Sony spokeswoman.

The project is scheduled to run until the end of 2005. While the ultimate goal is mass production of 45nm chips, a more modest target of developing the ability to make chips that small has been set for the end of next year. The mechanics of the chip itself will then be considered.

The deal cements a relationship in the semiconductor field started by the two companies in 2001 when they announced plans to work together with IBM on 65nm chips - the chips expected to power the upcoming PlayStation 3 console. Sony has committed ¥200 billion (£1bn) over the next three-years to ensure production capacity exists for the PS3 "Cell" chip. Just over half of that will go to constructing the company's own chip plant.

Despite their joint work with IBM and SCEI on the 65nm chips though, Sony and Toshiba have made it plain that they are going it on their own with the jump to 45nm. "This is just the two companies," said the Sony spokeswoman. "We haven't reached the level of inviting any other company because it's still at the early stage."