IBM to build Xilinx chips in $100 m deal

ARMONK: IBM Corp. and microchip company Xilinx Inc. announced on Monday a

$100 million, two-year deal for IBM to make extremely programmable chips for

Xilinx.

San Jose, California-based Xilinx, which hires manufacturers to produce the

chips it designs, said the market for the programmable Virtex-II chips would be

$5 billion in the next few years, since companies making communications, data

storage and consumer applications could all use them.

IBM, whose semiconductor operations have been hard pressed during the recent

technology downturn, said it would use its most advanced manufacturing processes

for the first time for such an outside customer.

The two companies, announcing the deal in a joint statement, collaborated on

the chip, which uses IBM's PowerPC chip technology and Xilinx elements that

allow customers to modify how the chips work, called field programmable gate

arrays, or FPGAs.