Samsung to share IBM's chips

Samsung said on Friday that it has simultaneously licensed Big Blue's chipmaking technology, signed on to use IBM Microelectronics' chip foundry service, and joined an IBM-backed partnership focused on future chip-manufacturing processes.

The Korean semiconductor giant will participate in the partnership, which currently includes IBM, Infineon and Chartered Semiconductor. The partnership will help the companies move to the next generation in chip manufacturing, known as the 65-nanometre process, and later to progress to the 45-nanometre process. The nanometre measurement, which is often used to describe a generation of chip manufacturing technology, also refers to the average distances between features inside a chip. A nanometre is a billionth of a metre.

The move toward such licensing and partnerships represents two intersecting trends, one within IBM and the other within the chip industry as a whole.

Lately, IBM has been trying to extract more revenue from its expertise in chip research and development and chip manufacturing. The company has begun licensing its PowerPC chip, offering chip design services and launching a foundry service at its new plant in East Fishkill, N.Y.

Industrywide, chip manufacturing has become more difficult as generations progress. Chipmakers have been boosting performance and lowering costs with each successive generation of chip-manufacturing technology. But lately, the approach of adding transistors has become more difficult -- adding more of the tiny on/off switches can escalate levels of energy consumption, among other problems. This has spurred designers to come up with creative solutions and has led companies to work together.

Building chip fabs is also getting more expensive all the time. Fabs now cost between $2bn and $3bn (£1.08bn and £1.62bn) to construct.

The development partnership, which was already under way at IBM's Advanced Semiconductor Technology Centre in East Fishkill, is using IBM chip-manufacturing technology as a starting point. The four companies will pool their resources, share ideas and work on a common manufacturing process that each can then use in its own manufacturing facilities.

While each company will gain new chip-manufacturing technology from the partnership, it will also serve to consolidate a portion of the industry's chip manufacturing on technology originally developed at IBM.

Working together
"The future development... represents a number of large semiconductor manufacturers working together on a common platform," IBM spokesman Chris Andrews said. "That will benefit customers in the long run -- knowing they can develop products that use this technology, a common platform and have potential for a number of suppliers."

Meanwhile, Samsung has also licensed IBM Microelectronics' 90-nanometre chipmaking technology for use in manufacturing system-on-chip, or SOC, processors for electronics devices, such as high-definition televisions. SOCs pack all of the necessary bits, such as a processor core, memory and screen controllers, into a single chip, allowing manufacturers to use one chip where they might have used two or more in the past.

Samsung isn't the only consumer-electronics giant to work with IBM on chip manufacturing. IBM, Sony and Toshiba are collaborating on chip design and manufacturing efforts related to Cell, a new kind of processor that's expected to power the next Sony PlayStation, among other devices.

Last month, Sony invested $325m with IBM to help build capacity for the production of 65-nanometer chips, such as the Cell processor, at the East Fishkill fab.

IBM has also recently licensed technology to Advanced Micro Devices and Microsoft for that company's Xbox. IBM has also signed up Nvidia as a foundry customer and is currently manufacturing chips for the graphics chipmaker.

IBM expects to begin manufacturing 65-nanometer chips in late 2005 as part of its agreement with Sony. IBM and others are currently producing chips using a 90-nanometre manufacturing process.