ALBANY - Sony Corp. will invest $325 million in IBM Corp.'s upstate New York semiconductor plant and work with Big Blue to produce tiny new chips for next-generation computer systems and consumer electronics.
IBM plans to begin pilot production of the "cell" microprocessors and other chips for Sony at the plant in East Fishkill, 60 miles north of New York City, in the first half of 2005.
IBM's chip-making division has struggled with weak demand, leading to a $252 million loss in the company's technology group in 2003. However, the Sony deal follows a November announcement by Microsoft Corp. that IBM will make chips for the next version of the Xbox video game consoles.
The chips produced at the Fishkill plant are to be the first IBM chips to be made on 300 millimeter wafers of silicon, instead of the current 200 millimeter wafers. More chips can be made from each of the larger wafers, improving productivity and cost-effectiveness.
The deal "is getting more and more significant as IBM continues to focus on this entertainment group," said Len Jelinek, principal analyst at the El Segundo, Calif.-based iSuppli, which tracks the semiconductor industry.
"It puts money in IBM's coffer, which they need and it also highlights their technology," he said. "In Sony's case, IBM has a very high success yield in products they design and manufacture."
"This agreement between IBM and Sony provides further proof that New York state has become one of the nation's leading destinations for new high-tech related investment, economic growth and job creation," Gov. George Pataki said Monday.
Although no new jobs will result from the agreement, the deal strengthens the future of the Fishkill plant, said IBM spokesman Chris Andrews.
He said Sony's announcement of a manufacturing commitment comes after IBM has worked since 2001 with Sony and Toshiba to develop the technology at IBM's Austin, Texas site. Sony and Toshiba are also building plants in Japan as part of the effort.
Although specific products that will be powered by the microprocessor haven't been announced, Andrews said chips could be used in things like home entertainment game consoles and super computers. Andrews said current home game consoles are envisioned to become the "center of home entertainment." For example, some of the consoles already play DVD movies and allow gaming over the Internet.
"You can't get away with the standard run-of-the-mill processor anymore," Andrews said.
"The fact that we signed on a very influential and big customer like Sony shows that the facility is going to be able to produce chips for customers who need a commitment from a supplier," he said. "Down the road, who knows what this could to for this site."
Sony said the semiconductors are "one of the most important technologies that would define and add values to the products," according to a statement from the Japanese headquarters.
The agreement is intended to boost IBM's 300 millimeter semiconductor manufacturing and produce the next generation 65 nanometer chips. IBM plans to begin pilot production of cell microprocessors and other chips for Sony at the plant in the first half of 2005, Pataki said.
IBM's chip-making division has struggled with weak demand, leading to a $252 million loss in the company's technology group in 2003. However, the Sony deal follows a November announcement by Microsoft Corp. that IBM will make chips for the next version of the Xbox video game consoles.
The chips produced at the Fishkill plant are to be the first IBM chips to be made on 300 millimeter wafers of silicon, instead of the current 200 millimeter wafers. More chips can be made from each of the larger wafers, improving productivity and cost-effectiveness.
The deal "is getting more and more significant as IBM continues to focus on this entertainment group," said Len Jelinek, principal analyst at the El Segundo, Calif.-based iSuppli, which tracks the semiconductor industry.
"It puts money in IBM's coffer, which they need and it also highlights their technology," he said. "In Sony's case, IBM has a very high success yield in products they design and manufacture."
"This agreement between IBM and Sony provides further proof that New York state has become one of the nation's leading destinations for new high-tech related investment, economic growth and job creation," Gov. George Pataki said Monday.
Although no new jobs will result from the agreement, the deal strengthens the future of the Fishkill plant, said IBM spokesman Chris Andrews.
He said Sony's announcement of a manufacturing commitment comes after IBM has worked since 2001 with Sony and Toshiba to develop the technology at IBM's Austin, Texas site. Sony and Toshiba are also building plants in Japan as part of the effort.
Although specific products that will be powered by the microprocessor haven't been announced, Andrews said chips could be used in things like home entertainment game consoles and super computers. Andrews said current home game consoles are envisioned to become the "center of home entertainment." For example, some of the consoles already play DVD movies and allow gaming over the Internet.
"You can't get away with the standard run-of-the-mill processor anymore," Andrews said.
"The fact that we signed on a very influential and big customer like Sony shows that the facility is going to be able to produce chips for customers who need a commitment from a supplier," he said. "Down the road, who knows what this could to for this site."
Sony said the semiconductors are "one of the most important technologies that would define and add values to the products," according to a statement from the Japanese headquarters.
The agreement is intended to boost IBM's 300 millimeter semiconductor manufacturing and produce the next generation 65 nanometer chips. IBM plans to begin pilot production of cell microprocessors and other chips for Sony at the plant in the first half of 2005, Pataki said.
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