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Chartered, IBM and Infineon Band Together

Singapore's Chartered Semiconductor on Thursday said it will be involved in the development and manufacturing for a new generation of logic processors with IBM Corp. and Infineon Technologies AG .

Chartered is connected to the government of Singapore, and under the terms of the five-year deal with U.S. and German companies, the company will be involved in the development of 65 nanometer processes for foundry chip production on 300 millimeter silicon wafers. Financial details were not disclosed by the partners in the venture.

The three companies said the deal is designed to accelerate the development of 65-nanometer chips. Currently, the smallest chips being commercially manufactured are 90 nanometers in width.

While no details of the contract were available, building massive new chip factories and testing facilities will require billions of dollars in investment over the term of the deal. Chartered is considered a highly-skilled chip manufacturing specialist, which will presumably assist IBM and Infineon is lowering their huge development costs.

Infineon brings its expertise in low-power silicon, while IBM is a leader in processing technologies. The partners will initially work together at IBM's new 300-millimeter development lab in East Fishkill, NY, known as the Advanced Semiconductor Technology Center.

Close to 200 engineers from all three companies will work on the parameters for creating chip manufacturing tools for this next-generation of semiconductors.

The new 65-nanometer chips will also be designed in a manner for a variety of computing technologies from high-powered computers to the next generation of mobile devices.

"Chartered, IBM, and Infineon plan to jointly develop a common advanced foundry process at 65nm, as well as variants tuned for high performance and low power. The companies are also exploring extensions to 45nm technology. To assist foundry customers in designing with these technologies, the companies have also agreed to work together with third-party providers to provide a robust ecosystem of optimized design tools," the companies said in a joint press release.

"Each company will have the ability to implement the jointly developed processes in its own manufacturing facilities. Both IBM and Chartered plan to have the jointly developed 65nm process installed in their respective 300mm fabs, and to be in a position to support Infineon's outsourced demand for 65nm products," the partners said.

On Thursday, Semiconductor Business News quoted a senior executive at United Microelectronics Corp. saying the company will "go it alone in process development for the 65-nanometer process mode." Taiwan's UMC said on Wednesday that it will spend $100 million to $130 million to buy out Infineon's 30 percent stake in a 300mm wafer fabrication plant in Singapore currently under construction.

By aligning with IBM and Chartered, Infineon is betting the three companies will be able to bring 65-nanometer technology to market. The decision is also a set back for UMC, which has had several major deals unravel in recent years.

Infineon joins an existing deal IBM and Chartered had setup last November, when the companies agreed to co-develop processing technology for the 90-nanometer and 65-nanometer nodes.

On August 4, the Semiconductor Industry Association (SIA) said there was a slight pickup in global semiconductor sales in June. It was the fourth consecutive monthly increase, but the sales index was only able to post growth a 0.4 percent. The previous month there had been a 2 percent increase in global chip sales.

The SIA said global sales for the second quarter reached $37.6 billion, a more than 10 percent increase over the year ago period, when the sector was in a pronounced slump.