Loss-making Singapore chipmaker Chartered Semiconductor Manufacturing has struck a deal with United States giant IBM to share research efforts and production facilities to narrow a technology gap with its two main Taiwanese rivals.
The multi-year agreement - financial details of which were not released - helped to boost state-linked Chartered Semiconductor's share price, which has been mauled this year by a disastrous rights offering; several successive quarters of losses and reams of bad press.
Analysts have frequently said the world's third-largest contract-chip manufacturer needed to forge an international alliance to help it to compete with much-larger United Microelectronics and Taiwan Semiconductor Manufacturing. IBM designs and manufactures chips.
Pearly Yap, sector analyst at BNP Prime Peregrine in Singapore, said yesterday: 'I think that this is a very beneficial arrangement for Chartered Semiconductor: it will save them money on technological development. The two companies can tap into one another. It is unlikely that Chartered would have been able to do this [new technology] on its own.'
Chipmakers - including Chartered and its rivals - are trying to boost efficiency by making larger wafers with smaller wire sizes. Both steps require vast capital outlays but translate into more chips per wafer, cutting unit costs.
The largest, most advanced wafers are 300mm, technology that Chartered Semiconductor is still developing but that its rivals have already mastered.
Under the tie-up, Chartered Semiconductor will gain limited access to IBM's 300mm production facility in East Fishkill, New York. Meanwhile, Chartered Semiconductor's planned 300mm plant - known as Fab 7 - will see pilot production deferred by 12 months to the third quarter of 2004.