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Sony to invest in IBM chip plant

Sony Corp will invest US$325 million in IBM Corp's upstate New York semiconductor plant and work with Big Blue to produce tiny new chips for next-generation computer systems and consumer electronics.

IBM plans to begin pilot production of the new microprocessors, code-named "Cell," and other chips for Sony at the plant in East Fishkill, 100km north of New York City, in the first half of next year.

IBM's chip-making division has struggled with weak demand, leading to a US$252 million loss in the company's technology group last year. However, the Sony deal follows a November announcement by Microsoft Corp that IBM will make chips for the next version of its Xbox game consoles.

The chips produced at the Fishkill plant will be the first IBM chips made on 300 millimeter wafers of silicon, instead of the current 200 millimeter wafers. More chips can be made from each of the larger wafers, improving productivity and cost-effectiveness.

IBM spokesman Chris Andrews said IBM, Sony and Toshiba Corp had been working since 2001 to develop the "Cell" technology at an IBM facility in Austin, Texas.

Although specific products that will be powered by the microprocessor haven't been announced, Andrews said they could include Sony's PlayStation game system and other home entertainment devices.

Separately in Tokyo, Sony and Toshiba said they intended to invest about ?42 billion (US$398 million) each to launch a plant in Japan that will produce chips with a 65-nanometer line width. The investment is separate from Sony's US$325 million outlay to IBM.

Sony's investment is part of the ?200 billion (US$1.89 billion) the consumer electronics giant said in April it would spend to produce 65-nanometer chips. Sony said "Cell" semiconductors can process nearly 10 times as much information as microprocessors now used in game consoles and other high-tech gadgets.

Sony and Toshiba will invest the money in Toshiba's plant in Oita Prefecture, southern Japan. The plant is equipped to manufacture 65-nanometer customized system processors using Complementary Metal Oxide Semiconductor, or CMOS, technology.

In addition, Sony will spend about ?53 billion (US$502 million) to bolster its existing 300mm wafer-based production line at Sony Computer Entertainment in Nagasaki Prefecture, southern Japan. That plant, "SCE Fab 2," manufactures ultra-fast processors including "Cell" and other system chips, the company said.

The three plants combined, including the IBM plant in East Fishkill, will produce about 15,000 wafers worth of high-speed custom chips a month when they begin test output in the first half next year, Sony said.
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