IBM’s Advanced Chip Fab Available for Hire

Maintaining a cutting edge semiconductor foundry is neither easy nor cheap; just ask AMD. The bulk of chip designers don’t maintain their own foundries because they are so expensive to maintain and those factories have to be kept up to date or they fall into obsolescence very fast.

The result is most semiconductor firms don’t maintain their own fabs, they farm the business out to third parties to do the manufacturing work. While some of these firms, like TSMC and UMC in Taiwan do an adequate job, Intel (NASDAQ: INTC) is considered the gold standard in chip manufacturing.

Well, IBM (NYSE: IBM) intends to change that by offering the first 45 nanometer (nm) Silicon on Insulator (SOI) foundry offering to anyone with a chip to make and sell. IBM claims that 45nm SOI chips will offer up to 30 percent performance improvement or 40 percent power reduction when compared to the industry-standard bulk complementary metal-oxide (CMOS) technology.

“45nm is our 6th generation of SOI technology and is a key driver in many collaborative designs with clients – including networking, storage, gaming and other consumer applications,” said Mark Ireland, vice president of IBM Semiconductor Platforms in a statement. “Today’s announcement is a progression of this deep experience, providing a world-class resource for the industry to build on this proven, next-generation technology.”

IBM has a separate semiconductor alliance, consisting of AMD (NYSE: AMD), Toshiba, Chartered, Freescale, Infineon, Samsung and STMicroelectronics. The alliance is working on SOI technology for the 32nm process node and beyond for a 2010/2011 release.

This, however, is a leap forward, bringing 45nm, the cutting edge of manufacturing technology, to third parties. Up to now, it’s been Intel’s competitive advantage, and while this offering won’t hurt Intel, it does flatten the playing field for competitors somewhat, according to one analyst.

A window of opportunity

“This would certainly narrow the barrier to entry,” Dean McCarron, president of chip research firm Mercury Research told “Obviously it wouldn’t eliminate it because you got to design the chip, and Intel will be moving to 32nm in the next year or so. So the window of opportunity to be directly competitive is relatively narrow.”

As part of this news, ARM (NASDAQ: ARMH) announced the availability of its standard cell, memory and I/O libraries for the foundry. The ARM SOI library of physical IP provides the synthesis and implementation flows needed in the manufacturing of SOI-based chips.

McCarron said this is a “fairly cutting edge process” IBM is rolling out, and that would likely bring in business from chip vendors currently looking to other foundries for chip manufacturing. “What we typically see happen is there is a portion of the business that goes to whatever is the best process out there is. So there will be some jumping,” he said.

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