Toshiba Corp is in talks with Singapore's Chartered Semiconductor (CSMF.SI) and Globalfoundries Inc about outsourcing production of some of its next-generation system chips to help cut costs, two company sources have told Reuters.

According to the story, Toshiba, which sources have said plans to bid for French nuclear group Areva's (CEPFi.PA) power transmission and distribution unit, is looking to save costs at its loss-making chip division as it seeks stabler revenues from the power business.

The world's No.2 maker of NAND flash memory chips plans to make 28-nanometre chips at its plant in Oita, southern Japan, but is considering contracting out production of chips exceeding its capacity, said company spokeswoman Hiroko Mochida.

But Yuichi Ishida, analyst at Mizuho Investors Securities, said he expected Toshiba to outsource all of its 28-nanometre chip production.

"It makes no sense to go to the trouble of investing in expensive equipment to make these cutting-edge chips if you're going to outsource as well. Why spend money you don't have to?" he said.

The full story can be read here: Reuters Story