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The Nihon Keizai Shimbun reported that the two companies hope to begin joint production as early as the first or second quarter of 2002.
The deal will involve the creation of two joint ventures, one for dynamic random access memory (DRAM) and one for flash memory, said the newspaper. Infineon is likely to own a majority stake in the DRAM company, while Toshiba will have a stake of up to 90% in the flash memory company.
"Toshiba has yet to make a decision," said Kenichi Sugiyama, a company spokesman. "We are still talking internally and deciding on what we will do with our DRAM business."
The company said earlier this year that it had begun looking for a DRAM production partner. Both Infineon and Samsung have been seen as possible partners for Toshiba.
The Japanese company's search was prompted by a collapse in the price of DRAM memory chips that began over a year ago and has recently pushed prices so low that, according to analysts, no company is able to make money on commodity DRAM chips.