IBM, AMD extend partnership to 32 nanometer technology

IBM Corp. and Advanced Micro Devices Inc. (AMD) have tacked a three-year extension onto their December 2002 collaboration agreement that could see the two companies work on chip-making technologies based on a 32 nanometer process. The agreement was set to expire at the end of 2005, but now extends until Dec. 31, 2008.

Under the revised agreement, dated Sept. 15 and included in documents filed with the U.S. Securities and Exchange Commission Tuesday, AMD will pay IBM between $250 million and $280 million over the next four years. In exchange, IBM will continue to host the research and development work at its East Fishkill, New York, facility.

"It's a sign that our relationship with IBM is going very well and this has benefitted both companies," said Karen Prairie, an AMD spokeswoman.

The most advanced chip-making processes today can create wires on a microchip that are as small as 90 nm, but IBM and AMD were collaborating on techniques to shrink them even further.

"We were already collaborating on 65 nm and 45 nm technology," said Chris Andrews, an IBM spokesman. "Now we've also added joint development on 32 nm technology to the agreement."

Though both IBM and AMD maintain chip-making foundries, the updated agreement gives AMD the right to have a third party manufacture chips based on the jointly developed technology, Andrews said.

AMD has also now licensed IBM's C-4 "flip chip" packaging technology, which is used to connect the microprocessor to the circuit board on Big Blue's server processors, Andrews said.

AMD and IBM have also worked together on the silicon-on-insulator technology that is used in AMD's Opteron processors, he said.

With the business of manufacturing microprocessors steadily becoming more complex and expensive, many vendors have turned to partnerships to defray costs. Hewlett-Packard Co. (HP), for example, partnered with Intel Corp. on the development of the Itanium microprocessor that is at the heart of HP's Integrity systems. And earlier this year, Sun Microsystems Inc. announced that it would stop development on its next generation UltraSparc V processors in favor of chips built by Fujitsu Ltd.

Last week industry research firm Gartner Inc. issued a report predicting that the number of companies involved in the semiconductor industry will shrink by 40 percent over the next ten years, largely as a result of the increasing cost and complexity of the business.

"Increasingly these more advanced technologies, like the move to 65 nm and the move to 45 nm are going to be very challenging," said Andrews. "If you have a skilled partner with whom you can share the investment, it helps."