UPDATE 1-Toshiba, GlobalFoundries in chip production talks

Mon Jan 24, 2011 2:38pm EST

Jan 25 (Reuters) - Toshiba Corp (6502.T) is hammering out a deal to outsource fabrication of advanced system chips to U.S. firm GlobalFoundries, the Nikkei business daily reported, citing company sources.

The two sides are in the final stages of negotiations, Doug Grose, chief executive officer of the American foundry, told the Nikkei in an interview.

"We had been considering outsourcing production to Samsung Electronics Co (005930.KS) and GlobalFoundries since last year," a Toshiba official told Nikkei.

Toshiba is trying to outsource fabrication of advanced products with circuit widths of 28-40 nanometers to save on hefty R&D and production costs and have its engineers focus on design, the paper said.

Samsung will likely handle low-cost fabrication of Toshiba's mainline image-processing chips, while GlobalFoundries will churn out semiconductors using the latest technologies, the Nikkei reported. (Reporting by Soham Chatterjee in Bangalore; Editing by Jarshad Kakkrakandy)

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