IBM moves into optical IC manufacturing

IBM moved to further leverage its sophisticated contract semiconductor

manufacturing capabilities with a strategic partnership with Multilink

Technology.

The two firms will develop new components for fiber-optic networking equipment

that integrate voice and data traffic over fiber-optic strands. Under the

terms of the deal, IBM is purchasing a minority stake in Multilink, a

Somerset, New Jersey maker of circuit boards for high-speed networking and

telecommunications equipment.

Analysts said the move is a part of IBM’s efforts to target a broad range of

IC markets, from high-end microprocessors, such as the Transmeta and Alpha

processor, to highly profitable communications ICs. IBM will produce the new

chips, which use a silicon-germanium-based design and production process.

Silicon-germanium allows electrons to move through circuitry faster than on

traditional silicon-based chips, while producing less heat in the process.

The market for fiber-optic components is expected to grow from around $7

billion to $23.1 billion in 2003. IBM will make the chips in the company's

Burlington, Vermont, plant. Ericsson AB, the world's third- largest maker of

mobile phones, will use IBM PowerPC processors in its products. IBM is also

producing chips for Vitesse Semiconductor, the largest seller of non-silicon

telecommunications chips.