Toshiba Corp. said Thursday it will start manufacturing semiconductors for U.S. microchip maker Xilinx Inc. early next year.
Xilinx, based in San Jose, Calif., is a leading manufacturer of semiconductors called field programmable gate arrays. These semiconductors are used in TV sets and mobile computerized terminals with image-processing features.
Although Toshiba produces a full range of electronics devices, from design to manufacturing, it has apparently struck the deal with Xilinx to reduce risks resulting from sharp fluctuations in demand for semiconductor chips.
It is adding semiconductor production lines capable of fabricating chips with a circuit width of 90 nanometers at its Oita Prefecture factory, which was completed in February. A nanometer is one-billionth of a meter.
Xilinx, which has no production facilities of its own, develops a range of advanced chips, including FPGAs.
The U.S. firm has been outsourcing production mainly to Taiwanese and other semiconductor manufacturers.
By teaming up with Xilinx, Toshiba will likely be able to use its production lines without having to find new buyers on its own. It should also help sustain the firm's factory utilization rates, even during market corrections.