Toshiba may be facing a huge bill for pulling out of the HD DVD format, but the company is obviously doing well enough to fork out $835 million for a Sony factory in western Japan.

The microchip production facilities are to be used by Toshiba to make high-performance cell chips and RSX graphic chips for its own products, but both chips will also continue to be used by Sony in its PS3 games console.

It is part of a joint venture by the rival companies (who were on opposite sides of the format war), which will start on 1 April.

Sony is to focus on producing image sensor chips for digital cameras.

In a separate announcement, Toshiba has announced it is going to team-up with SanDisk to spend $16 billion on two new flash memory plants.