IBM is cleaning house and emerging as the biggest dog in the semiconductor yard.

Its work on the G5 chip with industry-innovator Apple is well known. Also known is that Microsoft will adopt PowerPC chips in its forthcoming Xbox Next: Now, Microsoft's console game competitor Sony has announced a major investment in IBM to develop semiconductor technology for that company's PlayStation 3 console.

Sony plans to spend another $1.1 billion of the funds it has allocated to develop semiconductor technology for its PlayStation 3 console. The company will invest the money in technology to build advanced microprocessors for the PlayStation 3 and future consumer electronics products at its own plant and those of Toshiba and IBM .

The money will be spent to realize production of chips whose smallest features are 65 nanometers across at factories in Japan and the US belonging to SCEI, Toshiba and Sony.

The nanometer measurement refers to the smallest track or gap width on a chip's surface. Sixty-five nanometers is about a thousandth the width of a human hair, and about half the width that most of the world's most advanced semiconductor plants are capable of today. A smaller number means semiconductors can be made physically smaller because everything can be made to take up less space, or made more powerful because more can be crammed into a given space.

The four companies began researching 65-nanometer production and chip designs in 2001 with a collective $400 million investment in manpower and engineering into an Austin, Texas, facility, said Chris Andrews, an IBM spokesman. Sony has said its "Cell" microprocessor, which will be used in the PlayStation 3, will use the technology. Sony, Toshiba and IBM also plan to use the technology in a range of other chips for consumer electronics and computing products.


The second-phase investment announced yesterday will see approximately $502 million put into SCEI's Fab 2 facility in Nagasaki in west Japan. The first floor of the factory is currently vacant and the money will be used to build a clean-room to house the 65-nanometer production line, said Yoshiko Furusawa, a spokeswoman for SCEI in Tokyo.

Sony said it will invest around $340 million in IBM's semiconductor plant in East Fishkill, New York, and the remainder of the money, around $294 million, will be invested into Toshiba's plant in Oita prefecture in Japan.

All three plants are expected to begin sample production of 65-nanometer chips in the first half of calendar year 2005, according to Sony. The East Fishkill plant will start producing Cell chips in the first half of 2005, Andrews said.

The SCEI spokeswoman would not comment on when mass production is expected to begin. Without it, a steady supply of chips cannot be assured for the company's PlayStation 3 console. Timing for the release of the console has not been disclosed by SCEI, although the chip-production schedules disclosed yesterday suggest that a launch will not be possible until late 2005 at the earliest.

In November, Microsoft announced it would use IBM chips in the next generation of its Xbox gaming consoles. However, the nature of Microsoft's investment in IBM is different from Sony's, as it "involves some processor design work. It doesn't involve manufacturing yet," said Andrews.

"Each customer has a different relationship altogether. We produce custom microprocessors for different customers. We manufacture chips for Nintendo too," he said.

Last month, Toshiba said it expects to produce its first sample chips at 65 nanometers in March this year. The LSI (large-scale integrated circuit) chips will be produced on a prototype line at the company's factory in Yokohama, Japan, and supplied to customers for evaluation.