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AMD, IBM tighten ties

Companies will continue their alliance through 2011 and expand it to include the development of new transistors, among other tech.

Advanced Micro Devices and IBM have pledged to continue their technology development alliance through 2011 and have expanded it to new areas.

Under the arrangement, the two will cooperate to devise techniques for manufacturing chips using the 32-nanometer and 22-nanometer processes, as well as developing in-chip technologies to boost performance. The two also will also expand their cooperation to include developing new transistors, interconnects (the wires that connect transistors), lithography and packaging.

Research and development alliances between large chip companies have gone from being somewhat unusual six years ago to part of a normal way of life, because of the onerous expenses and technical difficulties associated with designing modern-day semiconductors.

A mask set--which is a blueprint of sorts for circuits--can cost well over $1 million and has to be redone if errors exist. Creating a technique to reduce power consumption, such as straining silicon, can take years and cost millions. And manufacturers must shoulder these expenses amid relentless price cuts.

Chipmakers also often have relationships with foundries to manufacture their chips because of the high costs associated with building plants.

AMD and IBM began to cooperate on advanced chip manufacturing in 2002. At the time, AMD was having trouble with silicon-on-insulator technology, or SOI, which the chipmaker had been working on with Motorola. Sunnyvale, Calif.-based AMD was also trying to end a doomed relationship with foundry United Microelectronics.

IBM solved the SOI problems. Later, AMD also entered into a foundry arrangement with Chartered, an IBM ally.

The AMD-IBM relationship was set to terminate in 2005, but last year it was extended through 2008.

IBM, of course, isn't acting out of altruism. Documents filed by AMD last year showed that between September 2004 and December 2008, AMD will likely pay Big Blue between $250 million and $280 million under their agreement. Still, it's not one-sided. AMD scientists are now firmly camped at IBM's chip development facilities and participate substantially in the creation of new chip technologies.

The two companies, along with Micron and Infineon, are also part of a $580 million research project to create lithography tools at the University of Albany in New York.