IBM, AMD Extend Chip-Making Alliance Through 2008

Advanced Micro Devices Inc. and IBM Corp. have extended their chip-manufacturing technology agreement for an additional three years, paving the way for further chip process advancements from both companies.

The contract was supposed to expire next year. Under the terms of the extended deal, AMD will pay IBM between $250 million and $280 million from September 2004 through December 2008.

In return, AMD gets access to IBM's chip technologies. The contract remains subject to approval from IBM's board of directors.

"Under the development agreement, [AMD] and IBM agreed to continue to jointly develop new logic process technologies, including 65-nanometer and 45-nanometer technologies, to be implemented on silicon wafers," according to a Form 8-K filing from AMD.

"Furthermore, if the company and IBM jointly develop 32-nanometer technologies during the term of the development agreement, the 32-nanometer technology will be licensed to the company," according to the SEC document. "In addition, the company received a license from IBM to have its products made in 90-nanometer and 65-nanometer at a third-party foundry or a joint manufacturing facility owned by the company and a third-party foundry."The agreement also allows AMD to make 300-mm chips within its Dresden fab using bumping technology from IBM.

In 2003, AMD and IBM agreed to develop manufacturing processes together for making high-performance logic chips and microprocessors with 65-nanometer and 45-nm critical dimensions. The first chips built using the technology are expected in 2005.

The new processes will be based on the combined experience of the two semiconductor makers in advanced structures and materials, such as silicon-on-insulator transistors, copper interconnects and improved low-k dielectric insulation, the companies said then. The agreement included collaboration on 65-nm and 45-nm process technologies to be implemented on 300-mm diameter silicon wafers.

For IBM, extending the AMD agreement fits in with the company's strategy of using alliances and partnerships to remain in the forefront of advanced technology development.

"Increasingly, companies realize it is difficult to do it all on their own," said an IBM spokesman. "There are great benefits to sharing manpower and expertise."IBM is using this strategy not only for chips but also components in consumer products.

Earlier this month, IBM inked an agreement with Eastman Kodak Company to jointly develop image sensors for digital cameras and camera phones.

Additional reporting by Spencer Chin