Loss-making chipmaker Chartered Semiconductor Manufacturing Ltd said on Thursday it would start producing chips with faster processing speeds for U.S. tech giant International Business Machines Corp.
The agreement, which expands Chartered's partnership with IBM, gives the Singapore-based company a "volume customer" for its most advanced factory, Fab 7, which is scheduled to kick off production in the third quarter, Chartered Chief Executive Chia Song Hwee told Reuters in a telephone interview.
The term volume customer usually refers to substantial production orders, accounting for a few percentage points of the company's revenue, analysts said.
State-controlled Chartered, the world's fourth-largest supplier of made-to-order microchips, first announced its partnership with IBM to make advanced chips in November 2002, in a bid to narrow the technology gap with its bigger Taiwan rivals, TSMC and UMC.
Under the earlier deal, both firms agreed to jointly develop 90 nanometre and 65 nanometre processes for chip production on 300 millimetre dinner plate-sized wafers, and have access to each other's factory capacity.
One nanometre, which in this case refers to the gap between transistors on a chip, is one billionth of a metre. The more transistors that can be included, the more powerful the chip.
Chia said that under the extended pact, Chartered would now make selected 90-nanometre chips that could process information at faster rates of between 20 to 35 percent for IBM.
Chartered would begin production of these chips in Fab 7 by mid-2005.
"This agreement shows Chartered's relationship with IBM is progressing, and firms up our Fab 7 start-up plans," Chia said.
"Chartered continues to look for appropriate partnerships where we can further solidify the (production) ramp for Fab 7."