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IBM tie-up underscores new chip direction

IBM will exploit its longstanding expertise in chip development and try to become a major hub of silicon design for low-cost devices, even as it backs away from memory chips.

IBM will begin to share its longstanding expertise in chip development with the outside world, in an effort to become a major hub for chip design in low-cost computing devices even as it backs away from the memory chip business.

IBM's increasingly important Technology Group will provide design technology and research facilities to other chip developers and manufacturers in partnership with Photronics. Lucent Technologies will become one of the first to take advantage of the IBM-Photronics partnership.

Photronics is one of the leading makers of photomasks, which is the mold for a chip's circuit layout and is the semiconductor equivalent of a photographic negative. Photomasks are used to transfer circuit patterns onto semiconductor wafers during the fabrication of integrated circuits.

IBM, which will detail its chip initiatives tomorrow, will separately announce new chip packaging technology to increase the reliability of server computers and networking gear.

The Technology Group, which oversees Big Blue's component strategy, has already cut high-profile, multibillion dollar deals with Acer and Dell for the supply of components and key technologies such as liquid crystal display manufacturing methods and custom chip design.

The initiative will defray chip development costs industry wide, IBM contends, citing the enormous financial resources that are required to develop next-generation mask technology. Elaborate system-on-chip designs--which crunch many functions on to a single chip--are pushing the limits of chip manufacturing and will require significant investments for chipmakers, IBM says.

In a typical relationship, a customer will first work with Photronics on chip design and then go to a technology center established by Photronics and IBM at a Big Blue chip facility in Burlington, Vermont. IBM will participate by providing the "Mask Center of Competency" research facility and know-how. The computing giant has long been a major player in a process for forming chip circuits called photolithography.

"Photronics will manage the mask development projects and intends to make the masks commercially available to the semiconductor community," the companies said in a statement.

The undertaking is not exactly altruistic, IBM admits. IBM can monitor and evaluate the new designs and chip technologies that come to the center and then pick the ones it deems the winners. "IBM benefits by getting immediate and continuing knowledge of these options. We will be able to implement new masks immediately [if one technology prevails]. Our goal is to maintain our leadership in custom chips," an IBM spokesperson said.

Photronics said that there are currently four photolithography methods vying for next-generation leadership. A technique called "scalpel," which Photronics has expertise in, and Extreme Ultraviolet or EUV are supported by the U.S. chip consortium Sematech, according to a Photronics spokesperson.

The other two are x-ray, which IBM has been working on for a number of years, and ion beam projection which is supported by makers in Europe such as Infineon, formerly the chip division of Siemens. Other variations on these techniques also exist.

The announcement follows IBM's decision to quit its DRAM memory chip venture with Toshiba in Manassas, Virginia and sell its stake to the Japanese company. An IBM spokesperson said this is a continuing effort to lessen dependence on DRAM memory chips and increase its presence in the chip market for future computer appliances. IBM executives have said repeatedly that they intend to downscale the DRAM business significantly--if not get out completely.

Big Blue said the center is designed to promote the growth of low-cost computer appliances, or what the company calls "pervasive computing," by making chips for these devices more affordable for other semiconductor manufacturers to produce. In the process the company hopes to create a standard for low-cost appliance computing chips.

System-on-a-chip solutions are expected to power many next-generation computing devices. IBM cites research from International Data Corp. which forecasts that by 2002 more than 50 percent of devices connected to the Internet will not be PCs, but appliances.

However, this scenario may not play out entirely as forecast. The PC industry is responding quickly to this phenomenon by pricing computers so low that that they are as inexpensive as--or cheaper than--TVs. Moreover, free PCs are being hawked by dozens of companies and major PC makers are offering models which sell below $500 while smaller upstarts sell boxes as low as $299, in effect, rendering a PC an Internet appliance.

In a separate announcement, IBM is announcing a semiconductor packaging technology that can significantly increase reliability for servers and networking gear that make up the backbone of the Internet. This new chip package is designed to "support the very high-frequency, high-bandwidth requirements being driven by the Web and to provide unmatched dependability, preventing outages," according to a statement.

"The networking hardware and servers that comprise the plumbing of the Internet weren't designed to handle the huge spikes of data flow from the latest hot Web sites," IBM said.

Blackouts can occur when the system gets overburdened, as Internet plumbing chips literally break from too much heating and cooling. IBM is announcing a semiconductor packaging breakthrough that "significantly increases the reliability and performance of such chips."