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Big Blue signs Intersil as chip client

IBM says it will manufacture power-management chips for Intersil next year, in a continued effort by Big Blue to become a big brother to smaller chipmakers.

IBM on Thursday said it would begin manufacturing power-management chips for Intersil next year, in Big Blue's continued pursuit to become a big brother to smaller chipmakers.

The company will manufacture Intersil's Endura power-management integrated circuits, which help regulate power and charge batteries inside handhelds, broadband gateways and graphics cards, among other products. As part of the agreement, IBM will reserve capacity in its Burlington, Vt., fabrication facility for Intersil and begin making chips in the first quarter of next year.

IBM is trying to boost semiconductor business by leasing its manufacturing facilities, chip design know-how, and research and development to companies who can't afford their own factories or completely fund R&D efforts.

For decades, IBM has been one of the premier semiconductor designers and manufacturers in the world, but the company's overall volume is far lower than rival Intel's. Serving as a foundry and a source for intellectual property is expected to help IBM more evenly spread out the billions of dollars in annual costs it takes to compete in the chip industry.

So far, the success is uneven. The company has landed deals with high-profile customers such as Sony and Nvidia. On the other hand, IBM Microelectronics lost about $100 million in the most recent quarter and is laying off 600 employees.

IBM generally charges more than foundries such as Taiwan Semiconductor Manufacturing Co. or United Microelectronics Corp., but it can provide esoteric design techniques that are becoming increasingly important.

Advanced Micro Devices, for instance, ended a technology relationship with UMC in favor of IBM, in part to help AMD cure problems it was having with implementing a technology called silicon-on-insulator in its Opteron processor.

So far, most of IBM's foundry deals have involved its East Fishkill, N.Y., facility, a cutting-edge factory that was refurbished last year. Intersil's chips will be made in Burlington because they are analog chips, which measure real-world phenomena such as temperature and air pressure. Analog chips generally don't require the most advanced manufacturing processes.