IBM inks process development pact with Chartered

IBM inks process development pact with Chartered
By David Lammers, EE Times
November 26, 2002 (6:13 p.m. EST)
URL: http://www.eetimes.com/story/OEG20021126S0040

EAST FISHKILL, N.Y. — IBM Corp. and Chartered Semiconductor Manufacturing Pte. have signed a joint development and manufacturing agreement that will result in a common process platform starting at the 90-nanometer node. The agreement will give each partner a second manufacturing source for parts produced on 300-mm wafers.

The companies will align on a common 90-nm process, and will jointly develop a 65-nm process, with an option to continue on to the 45-nm node. And the two companies will work together with commercial EDA vendors and "open standard formats" to help customers "more easily move their products between the two companies for production," according to a joint statement.

IBM expects to reap "hundreds of millions" of dollars in licensing fees from the joint development agreement, an IBM spokesman said. The agreement does not include IBM's silicon germanium or silicon-on-insulator technologies, the spokesman said.

Bill McClean, president at market research firm IC Insights (Phoenix), said the agreement will help Chartered compete at the leading-edge with processes featuring finer design rules, where most of the profits lie for foundry companies. IC Insights estimates that Chartered will lose money this year, with an expected $400 million deficit on revenues of $445 million. Chartered said on Oct. 25 that its capacity utilization was 39 percent, a number that will be updated Dec. 2 in an analyst conference call.

Some of the license fees Chartered pays to IBM will come in the form of per-chip commissions, with both companies benefiting from higher volumes, McClean said.

"This is a boost for Chartered, because the foundry business is more and more dependent on having good leading-edge technology, and the ASPs [average selling prices] for foundry wafers reflect that," McClean said.

IBM announced early this year that it would focus more closely on its foundry business, in part to fill out its fabrication facility in East Fi shkill, N.Y., which is now moving into early production on 300-mm wafers. IC Insights estimates that IBM's foundry revenues this year will slightly exceed Chartered's sales: $510 million for IBM and $445 million for Chartered.

Michael Buehler-Garcia, vice president of marketing and design services at Chartered, said the two companies will meet next week to determine if they can have access to each other's intellectual property (IP). Since both companies will use the same process equipment at the 90-nm node, it would be possible for Chartered customers to license IP from IBM, and vice versa, he said.

"We will meet next week to see how deep we will take this" in terms of IP sharing, Buehler-Garcia said. Both companies will use the same libraries, though the mixed-signal, capacitors, and other non-digital components will differ, he said.

Dual manufacturing sources

"The important thing about this is dual sourcing," Buehler-Garcia said. "It gives the customers more flexibility, more cho ices. IBM can source its internal and external ICs to Chartered, and we have the option to move our customers' products to IBM's 300-mm fab starting in the third quarter of next year."

Also, Chartered can push back or defer its capital expenditures for its 300-mm facility, Fab 7, or in the case of a strong upturn it could accelerate those investments.

Chia Song Hwee, president at Chartered, said in a statement that "this agreement offers Chartered the flexibility to defer the pilot production of our 300-mm Fab 7 until late in the third quarter of 2004, while still meeting our customers' needs and gaining 300-mm manufacturing experience."

The agreement also accelerates Chartered's ability to offer 90-nm designs. IBM expects to bring up its bulk 90-nm CMOS process at East Fishkill in the third quarter of 2003. Buehler-Garcia said Chartered's customers can start 90-nm designs now and have them manufactured initially at IBM's East Fishkill fab.

The deal with Chartered essentially replaces an ag reement IBM had with United Microelectronics Corp. (Hsinchu, Taiwan); that is no longer in force, an IBM spokesman said.

UMC is now working with Infineon Technologies AG and Advanced Micro Devices Inc. on process development at the 65-nm node. AMD and UMC are building a jointly owned 300-mm fab in Singapore.

Copyright © 2003 CMP Media, LLC | Privacy Statement