Toshiba and NEC join forces on 32nm chip research

Collaboration is a smart move for both companies

In an effort to cut costs and speed innovation in a competitive semiconductor industry, Toshiba and NEC Electronics Tuesday announced plans to jointly develop 32 nanometer (nm) chips.

The companies have been working together to build 45nm process technology since February 2006, and now have extended their partnership to the 32nm generation.

Dan Olds, an analyst at the Gabriel Consulting Group, said the collaboration between Toshiba and NEC is a smart move for both companies.

"The move to a new process level is very expensive, risky, and can be time consuming," said Olds. "Partnering up spreads the risk and cost between the parties, while also giving them some synergy benefits from combining their best technical people and technologies. It also allows them to jointly make a bigger investment than they would if each were going it alone."

Earlier this month, analysts applauded Sony Corp.'s decision to pull out of plans to join IBM and Toshiba in a 32-nanometer chip research effort. Analysts called the withdrawal a smart move, allowing Sony to divert that research money directly to its ailing bottom line.

"If you look at the industry, we're starting to see more and more partnering with fewer players -- only the biggest usually, like Intel -- keeping to themselves," said Olds. "If you're selling chips to other people, in order to get margins above bare commodity level, you need to be at the cutting edge of technology. If you're making chips for your own use, then the need for advanced tech is even greater.

competitors have products based on 32nm, you need to have your products on 32nm in order to remain competitive."

This week, Toshiba announced it is discussing a manufacturing partnership with NEC, as well. A decision on that joint venture is expected to come down in 2008.

Late in October, Intel opened a new US$3 billion manufacturing facility in Arizona, kicking off mass production of its new 45nm Penryn microprocessors.

Jim McGregor, an analyst at In-Stat, said in a previous interview that now that 45nm technology is in production, 32nm microprocessors should be only about two years away.

A microprocessor built with 32nm process technology will be smaller than its 45nm predecessor, which, in turn, is smaller than today's 65nm chips. Parts of the chip, like wires and transistors, get smaller, as well, allowing it to work more efficiently because of the increased density. They're also cheaper to produce because manufacturers can pack more chips onto a silicon wafer.

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