NEW YORK (The Street) - IBM (IBM - Get Report) is pumping $3 billion into hardware innovation - trying to jump ahead of the pack in cloud and cognitive computing.

Serving as a testament to Big Blue's commitment to get on the leading side of cloud innovation, the company announced it will invest $3 billion over the next five years in two broad research and early stage development programs for chip technology. The research focuses on making semiconductors more efficient for cloud computing and Big Data systems.

IBM is taking the first in a series of steps in changing up the hardware. The areas focused on in the funded studies include, carbon nanoelectronics, silicon photonics, new memory technologies, and architectures that support quantum and, no surprise here, cognitive computing. IBM is looking continuing to shrink the chips while making them more energy efficient as well as looking to switch to different technologies for semiconductors.

One of the research programs funded by the investment is "7 nanometer and beyond." Looking to offer the smallest, IBM researchers and semiconductor experts are scaling today's 22 nanometer chip down to eventually 7 nanometers by the end of the decade. IBM said its research will produce chips that are smaller and faster and use less power.

"This is another step we see in how we rethink computing systems, the $3 billion underscores our investment to remain a leader in high performance high-end storage and cognitive computing," said Tom Rosamilia, Senior VP, IBM Systems & Technology Group in a phone interview with The Street. 

IBM is trying to beat out the competition in cloud and Big Data from the bottom up.

"Over the next ten years we will be developing fundamentally new systems no one has yet imagined," Rosamilia stated. "[W]e believe that no other company can do this from the semiconductor all the way through the software stack."

"This is a response to the shifts we are seeing in the industry in cloud," said Rosamilia.

The research teams will comprise more than a thousand IBM Research scientists and engineers from around the world with teams in New York, California, and Zurich, Switzerland.

"The question is not if we will introduce 7 nanometer technology into manufacturing, but rather how, when, and at what cost?" said John Kelly, senior vice president, IBM Research, "IBM engineers and scientists, along with our partners, are well suited for this challenge and are already working on the materials science and device engineering required to meet the demands of the emerging system requirements for cloud, big data, and cognitive systems. This new investment will ensure that we produce the necessary innovations to meet these challenges."

The second research project is focused on developing alternative technologies for post-silicon era chips. IBM scientists and other experts say looking beyond silicon is necessary because of the physical limitations of those semiconductors.

Carbon nanotube transistors could be used to replace the transistors in chips that power IBM's data-crunching servers, high performing computers and ultra-fast smart phones. These transistors can be 10,000 times thinner than a strand of human hair and less than half the size of the leading silicon technology.

"As we look at this, the clock is really ticking on silicon," said Rosamilia, "We have been riding the silicon train for quite some time but it's really starting to taper off." IBM hopes its research will bridge beyond silicon into the next era of semiconductors looking into technologies like carbon nanotube and graphene.

"We are committed to the next generation in fact we are innovating and inventing the next generation of what will follow the silicon era," Rosamilia noted.

-Written by Kathryn Mykleseth in New York