IBM, ARM Team Up On Tablet Chips

IBM isn't known as a consumer electronics vendor, but a new collaboration that Big Blue announced with British chip designer ARM should give the enterprise IT giant a stake in the fast growing market for tablet-style computers.

Under an agreement disclosed Wednesday, IBM will help ARM scale its Cortex manufacturing process down to 14 nanometers. That would give ARM one of the thinnest silicon substrates in the industry and bolster its position as the preferred provider of slate processors.

ARM's system-on-a-chip platforms dominate the emerging tablet computer market, and the deal gives IBM a part to play in what's expected to be one of the tech sector's hottest segments in 2011.

"ARM's Cortex processors have become the leadership platform for the majority of smart phones and many other emerging mobile devices," said Michael Cadigan, general manager for IBM's Microelectronics unit. "We plan to work closely with ARM and our foundry customers to speed the momentum of ARM technology for a variety of new communications and computing devices," said Cadigan.

For their part, ARM officials said that handing off manufacturing to IBM would allow their company to increase its focus on the design of next generation mobile processors.

"IBM has a proven track record of delivering core research and development that is relied upon by major semiconductor vendors worldwide for their advanced semiconductor devices," said Simon Segars, executive vice president and GM over ARM's Physical IP unit.

"This agreement will ensure we are able to deliver highly tuned ARM Artisan Physical IP solutions on advanced ISDA process technologies to meet the early time-to-market our customers demand," said Segars.

ARM has rapidly emerged as the leading provider of chips to tablet OEMs such as Samsung and Dell. Even Microsoft, a longtime ally of Intel, recently said it plans to develop a version of the next generation of Windows—most likely to be named Windows 8—that's geared to run on ARM's chips.

IBM's shares were up 3.05% in late-morning trading Wednesday. ARM shares were down 2.5% following a 3% spike Tuesday that came on the heels of a Goldman Sachs report that set a price target of $11.19 on the stock.

Goldman Sachs believes tablets will displace one in three PC sales in 2011. Financial terms of ARM's deal with IBM were not disclosed.