Intel and IBM Form Chip Research Tag Team

Two of the world’s leading semiconductor manufacturers, Intel and IBM, announced a shared investment Tuesday of US$4.4 billion to develop cutting-edge chip technology in the state of New York.

The partnership, a continuation of a decade-long project, has two main goals. First, the industry aims to increase the size of a wafer to 450 millimeters, allowing more chips to be placed on a wafer, which will provide benefits in economy of scale.

“When you can double the number of chips that you can get on a given wafer, what you can also do is reduce the overall cost of manufacturing, and you increase the speed with which you can move volume through these,” Intel spokesperson Chuck Malloy told the E-Commerce Times. “You’re also able to reduce individual environmental footprint.”

IBM, Intel and other partners including Samsung, Globalfoundries and Taiwan Semiconductor Manufacturing Company will collaborate on those efforts.

The second part of the project is to develop computer chips using 22-nanometer- and 14-nanometer-process technology. Shrinking chip size and increasing efficiency could lead to smaller and more functional devices. IBM invested $3.6 billion into the research and will work with experts from around the world.

IBM and Intel work side by side in research facilities at the College of Nanoscale Science and Engineering at the State University of New York in Albany.

“Historically companies have done this on their own, which has downsides,” Malloy said. “The first is that it’s more expensive overall because each company has to spend more to build the equipment and for applied materials. Working together with Nikon in Japan and a whole bunch of other suppliers puts it in one place, which reduces the costs, and there is one set of inputs and one set of R&D. It will ease the process.”

IBM did not respond to a request for comment by press time.

On the Cutting Edge of Technology

The ultimate goals of the projects are to create smaller, cheaper and faster transistors and to increase the size of the wafer on which chips can sit to decrease costs.

“Anybody in semiconductor manufacturing will tell you it’s the future. The question is not if but when, so this collaboration is everyone going out there to really further develop and get this technology relatively healthy so it becomes commercialized,” Patrick Wang, managing director of research for semiconductors at Evercore, told the E-Commerce Times.

The collaboration is unique in many ways. Usually companies compete to advance to the next technological node, but for the wafer size question the shared resources mean a product can be ready for manufacturers faster and more efficiently.

“Albany Nanotech is a neutral territory where these companies and researchers can collaborate. Companies like IBM, Samsung, Globalfoundries and others all have a shared interest in solving these hard physics questions, and that’s where the pools of research come in,” said JoAnne Feeney, vice president and senior semiconductor analyst at Long Bow Research and former business strategist for Albany Nanotech.

The commitment to developing 22- and 14-nanometer chips is a side in which Intel may not have much involvement, if only because of its leader status as a semiconductor manufacturer.

“Intel is leading the entire world by a generation in this technology, and they’re continuing to invest company dollars to maintain that deal. IBM, by investing in this project, is saying we need to work together to catch up to Intel. It’s really a testament to Intel’s strengths,” said Wang.

In a New York State of Research

This is a unique collaboration between technological giants, but executives acknowledged it wouldn’t have been possible without the efforts of the New York state government and the partnership with the College of Nanoscale Science and Engineering at the university.

“The role of New York State shouldn’t be underestimated. They were partners from the beginning,” Feeney told the E-Commerce Times.

Albany, like so many other state capitals in the throes of recession, was eager to find a way to bring jobs and a lifeline to an economically stagnant region.

“There is a dual focus. From a company’s perspective, it gives them subsidies to do this very expensive and crucial research, and from a state’s perspective, it brings human as well as financial capital to the region,” said Feeney.

For Albany, the investment over the past decade has paid off, and the enthusiasm of state officials at the announcement Tuesday is an indication the collaboration will be beneficial going forward.

“It’s a natural location for this sort of work to continue. New York State has been a great supporter of this effort since it began, and they’re saying they remain committed to keeping this high-end research there. It paid off for them. It succeeded in bringing research and then manufacturing to the region. This announcement gives people a reason to invest in education and stay in the area,” said Feeney.

With unemployment high, Albany can be an example for U.S. companies looking to develop domestically.

“One of the things I’ve been hearing a lot more of from companies is that the U.S. used to be the center of innovation, but in the past 10 years we’ve been sending all our research and development overseas,” said Wang.

Now, though, as unemployment woes continue and global competitors start gaining on domestic corporations, Wang said politicians aren’t the only ones calling for U.S. job creation and a focus on harboring innovation.

“What you’re seeing now is a switch, that they’re saying that abroad they can do the quantized manufacturing, but we’re going to continue developing lead-edge technology. In that way, it’s a really interesting initiative,” said Wang.