Toshiba will begin making flash memory chips using 43-nanometre technology as early as this business year to cut production costs, the Nikkei business daily reported on Saturday.

Toshiba, the world's number two maker of NAND flash memory chips after Samsung, is rushing to make chips more efficiently with prices seen tumbling 50 percent during the current year to March 2008, the paper said.

Using 43-nanometre technology should allow Toshiba to lower costs by 40 percent since the number of semiconductors that can be made from a single silicon wafer would rise by 40 percent compared with existing 56-nanometre technolgy, the Nikkei said.

Toshiba has enjoyed strong demand for NAND flash chips, which are widely used in digital cameras, photo-snapping phones and portable music players. They could also one day emerge as a viable alternative for hard disk drives used in personal computers.

Toshiba will make the 43-nanometre chips at a new plant in Mie Prefecture, southwest of Tokyo, which is due to come on-line later this year. The factory is its fourth memory chip plant in Japan, the Nikkei said.

Samsung plans to start producing 50-nanometre products this year, the Nikkei said.