IBM chip technology out in the open

Caroline Humer

NEW YORK: International Business Machines Corp. unveiled a strategy to encourage other companies to design new products based on its microchips by making it easier to customize them.

The move is aimed at broadening IBM's chip business, which has been losing money and was recently folded into its broader computer division, into new areas such as consumer electronics like handheld computers and games.

IBM is trying to foster innovation in hardware by making it easier for companies like Sony Corp. and defense electronics maker L-3 Communications Holdings Inc. to collaborate on new chip design.

The strategy is similar to IBM's push in its software business to advocate the use of the open source Linux operating system, which allows users to customize the source code by tinkering with the underlying code.

The company, which competes against No. 1 microprocessor maker Intel Corp., has spent billions in recent years on manufacturing advances for chips even as it expanded its services and software divisions through acquisitions.

The microchip investment, which coincided with a sharp decline in corporate spending on technology, has been slow to pay off, but the company credits market share gains in its server division to its chip advances.

Working with other companies on technology outside of the chip's core structure, such as adding a graphics component, will enable IBM to share the expense and speed development, said William Zeitler, who co-heads the company's systems and technology group.

"There are limits to how much you can accelerate innovation, even for a company our size. If you can collaborate broadly there are almost no limits to how much you can accelerate innovation, " Zeitler said.

The move will enable electronics companies to push new products out quickly as information on how to modify the chip for a certain function is widely shared, said Richard Doherty, research director at Envisioneering.

"Even kitchen appliances and air conditioners have Power architecture in them," Doherty said. "You're going to see people be able to get to market faster."

It could give IBM a leg up against Intel in that typically, customizing an Intel chip for such a process has meant waiting months for Microsoft Corp. to write the needed code, he said.

IBM, which will launch the next version of its Power line of microchips later this year, called Power 5, said that it would make design tools available for use by outside developers.

The company, based in Armonk, New York, said the move would also make it easier for other companies, such as the Asian contract chip makers like Chartered Semiconductor Manufacturing Inc. to make its chips.

Among U.S. companies, Motorola Inc., the world's second-largest cell-phone maker, already makes chips based on IBM's Power designs. IBM said that Sony had agreed to license the Power architecture from IBM for use in consumer devices. That arrangement is separate from an earlier agreement in which the companies are collaborating on gaming chips.

IBM makes server computers based on its Power microchips, which it manufactures in its own facilities, including a new plant in East Fishkill, New York. It also makes chips for companies such as Apple Computer Inc. and Nintendo Co. Ltd.

© Reuters