(Adds background on the companies' technology plans and share prices.)

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TAIPEI -(Dow Jones)- Micron Technology Inc. (MU) and Nanya Technology Corp. (2408.TW) plan to use more advanced 42-nanometer technology to make memory chips from the second half of this year, the two companies said in a joint statement Tuesday.

The companies are adopting the advanced technology ahead of schedule, reflecting the intensifying competition among makers of dynamic random access memory chips as the sector emerges from a downturn that began in 2007.

"Nanya plans to serve the server and PC market, as well as the consumer market, with this latest technology device," Nanya Vice President Pei Lin Pai said in a statement Tuesday.

The 42-nanometer process will allow the companies to produce 2 gigabit double data rate 3 chips, which are smaller, more power efficient and offer higher performance than the most common chips made now.

A chip's transistor components and the spaces between them are measured in nanometers. The smaller and more closely transistors can be packed together, the more powerful the chip.

In late January, Pai said Nanya and Inotera Memories Inc. (3474.TW), Nanya's joint-venture of U.S.-based Micron, would only be ready to start a pilot project using 42-nanometer technology in the second half this year.

Earlier the month, Nanya's local rival, Powerchip Semiconductor Corp. (5346.OT), said it would start test runs using 40-nanometer technology in the second half of 2010.

Both Nanya and Powerchip returned to profit in the fourth quarter, after 10 consecutive quarters of losses.

As of 0307 GMT, Nanya's shares were up 2.8% at NT$23.60. Inotera was up 3.3% at NT$21.70.

Nanya and Inotera are in the process of upgrading all of their production technology to 50-nanometer technology.

Pai said last month 42-nanometer technology will enable the companies to produce 50% more chips per wafer than 50-nanometer technology and cut production costs by 30%.

Micron and Nanya are also developing even more advanced 30-nanometer technologies, according to the statement.

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