The two firms will jointly build the facility to mass-produce a new microprocessing unit on the premises of Toshiba's Oita factory in southern Japan, the Nihon Keizai Shimbun said.

"Toshiba, Japan's largest chipmaker, and the Sony group, the country's biggest user of chips, plan to build a production base with global competitiveness," the newspaper said.

Sony and Sony Computer Entertainment Inc., maker of popular PlayStation and PlayStation2 video game consoles, will pay for 20 to 25 percent of the roughly 200 billion yen needed to build the new plant, it said.

Toshiba approached the two firms for possible investment after announcing its construction plans last December, the Nihon Keizai said.

The facility will mostly produce a new microprocessing unit being developed jointly by Toshiba, SCE, and IBM Corp., it said.

Sony officials declined to comment on the report. They said, however, that Toshiba and Sony have close ties, including production of microprocessing units for PlayStation2 game consoles. Toshiba officials could not be reached for comment.

SPACE.WIRE