Toshiba and NEC have agreed to work together on the future of processors.

The two Japanese biggest chip makers will jointly develop the technology for 45 nanometer manufacturing. At present, most advanced chips are made on 90nm production lines, although Intel has introduced technology that works down to 65nm.

Toshiba announced its intention to do exactly with the same with Sony last year, raising the possibility that all three will end up working together.

Each advance in production technology can cut costs and benefit users. Because everything on the chip is smaller, the entire package can be reduced in size, or more components can be crammed into a chip of the same size to make it more powerful. In some cases, several chips can be consolidated into one, meaning portable gadgets can be made more compact, and in most cases power consumption is reduced.

However, it is becoming harder and harder to push the boundaries of chip development, and that's leading companies work together to share costs and cut development time.