Micron Technology, one of the world's largest DRAM (dynamic RAM) chip makers, and Taiwan's Nanya Technology on Monday signed an agreement to jointly invest US$1.1 billion by the end of next year to open a new DRAM company in Taiwan.

The two companies also plan to jointly develop new chip technology, they said.

Micron, of Boise, Idaho, and Nanya will each hold a 50 percent stake in the new joint venture company, which they named MeiYa Technology Corporation.

The initial investment by the two companies will be to convert an existing Nanya factory in Taiwan into a state-of-the-art 300-millimeter DRAM manufacturing plant.

The two companies will also jointly develop and design DRAM with transistors smaller than 50 nanometers. The smaller the components that make up a chip, the more can be fitted into the same space and, typically, the lower the power consumption.

Germany's Qimonda is currently Nanya's technology partner. Nanya plans to let its current technology agreement with Qimonda expire once they have developed components as small as 50 nanometers. For more advanced, sub-50-nanometer technology, Nanya will work with Micron.

The loss of Nanya Technology as a technology partner deals a blow to Qimonda because the two companies had shared research and development costs and jointly own an advanced chip company in Taiwan, called Inotera Memories.