Hoping to turn its money-losing chip business into a winner, IBM ( IBM) on Wednesday unveiled a program that will make it easier for other companies to customize Big Blue's microprocessors. IBM hopes the move will help it sell its robust "Power" line of chips into new markets, including automobiles, medical equipment, consumer electronics and super computing. Making the chips customizable will make it cheaper and faster for customers to design new products around them, said Irving Wladawsky-Berger, IBM's vice president for technology and strategy. Although IBM is generally considered to excel in designing and manufacturing semiconductors, its chipmaking arm, IBM Microelectronics, has been losing money. Earlier this year, the unit was folded into IBM's broader systems division. The company's technology group, which included the microprocessor division, lost $1.06 billion in 2002. The group reported a much smaller loss in 2003, but it's unclear if the numbers were comparable. IBM no longer reports separate financial results for microprocessors. On Monday, Sony ( SNE) said it has agreed to license Power chips to use in consumer devices, in addition to an earlier agreement to use IBM chips in its game consoles. "A deal with Sony, which will consume millions of units, makes lots of sense. But I'm not sure that the economics work for smaller customers," said Nathan Brookwood, a veteran chip-watcher and principal analyst of Insight64. "It costs a lot of money to put a chip
even a modification of an existing one into production." However, Richard Doherty, research director of Envisioneering, a market research and consulting company, told Reuters: "Even kitchen appliances and air conditioners have Power architecture in them. You're going to see people be able to get to market faster." By opening the chip's design to third parties and providing design tools at no charge, IBM will make it easier for foundries to produce Power chips for customers. IBM hopes that will expand the reach of the architecture and give Big Blue another weapon in its battle against Intel ( INTC), the world's largest semiconductor maker.
Wladawsky-Berger said that smarter, customized chips will have a wide variety of uses, particularly when combined with robust data processing capabilities. A powerful processor in an automobile, for example, could collect data on engine or transmission performance, and send it to a database where it could give an early warning of potential design flaws. "No more unexpected recalls," he said. Smarter chips also could be built into shipping containers, and when combined with wireless data transmission, could warn customs officials of the presence of radioactive or bioactive elements planted by terrorists. Chips with an open design also are a good fit for systems built around Linux, the free open-source operating system, he said. "This is a major reason that we have supported Linux," Wladawsky-Berger said during an interview.