Chipmaking Team Builds Next-Generation Prototype

Updated from 2:52 p.m. EDT

A coalition of chipmakers have produced successful prototypes of next-generation chips, marking a milestone for an emerging business model as well as for technology.

The four companies -- IBM(IBM - Cramer's Take - Stockpickr), Chartered Semiconductor(CHRT - Cramer's Take - Stockpickr), Samsung and Infineon(IFX - Cramer's Take - Stockpickr) -- said Tuesday that they have established a process for manufacturing chips with 45-nanometer circuitry, two generations ahead of the current standard.

By making chips with smaller circuits, semiconductor makers can pack more transistors on each piece of silicon, resulting in greater performance and functionality. According to the announcement, the first working circuits in 45-nanometer are targeted at communications products, where performance and power consumption are critical.

IBM Vice President of Semiconductor Research and Development Lisa Su said that early tests indicate a 30% boost in performance.

As the size of the circuits within a chip shrink, developing the technology and process to manufacture the chips becomes increasingly expensive and complex. Previous attempts to defray the costs by teaming up with other companies have not always fared well, however.

"By leveraging the significant R&D and IP resources available worldwide across this alliance of industry leaders, we are able to bring manufacturing technology and design readiness to the market much sooner and effectively for customers than working individually," Su said in a statement.

IBM, like most semiconductor firms, is currently producing chips with 90-nanometer circuitry.