IBM has linked with Japan's TDK to develop so-called spin torque transfer RAM (random access memory) or STT-RAM. In STT-RAM, an electric current is applied to a magnet to change the direction of the magnetic field. The direction of the magnetic field (up-and-down or left-to-right) causes a change in resistance, and the different levels of resistance register as 1s or 0s.

Under the current plan, IBM and TDK, an integral player in magnetic recording components for hard drives, will develop a 65-nanometer prototype within the next four years.

Previously, IBM had been working on a more conventional type of magnetic memory called MRAM. However, the company has been having trouble shrinking the transistors on these chips. "As you make that device smaller (MRAM), you need to increase the magnetic field, and to continue to write (data), it becomes impractical," said Bill Gallagher, senior manager of exploratory nonvolatile memory at IBM. "To scale beyond 65-nanometer, we have to find a new mechanism to write information."

Read more here (C|NET)