In a surprise move, both nVidia and IBM announced that the two companies have formed a multi-year strategic alliance under which IBM will manufacture nVidia's next-generation GeForce graphics processor units (GPUs).
According to Michael Hara, Nvidia's head of investor relations, told Reuters : This is not in response to anything TSMC (nVidia's former manufacturing partner) has done. We're going to be a much bigger, multibillion dollar business, and realistically no one foundry can service that.
Although nVidia are suggesting they have no complaints about TSMC, the move is considered to be an attempt to return to their formula of product announcement followed by quick product release. This method had secured the performance crown for nVidia for quite some time, until things went bad in 2002 and they had to surrender the crown to ATI.
State-of-the-art GPUs, like nVidia's Geforce FX, have become process and manufacturing drivers. To deliver the immense computational power needed to create cinematic images in real-time, nVidia's GPUs require the most sophisticated process technologies.
As part of the agreement, nVidia will gain access to IBM's comprehensive suite of foundry services and leading-edge manufacturing technologies, including power-efficient copper wiring, and a roadmap that leads to 65nm (nanometer; a billionth of a meter) in the next several years, giving the company the necessary tools to advance its state-of-the-art GPUs.
IBM is bringing a new foundry business model by combining advanced technology coupled with close customer integration, stated Jen-Hsun Huang, president and CEO at nVidia. Our strategic alliance with IBM gives NVIDIA unprecedented opportunity to bring groundbreaking GPU products to the market. The combination of NVIDIA and IBM's capabilities will be powerful.
IBM plans to begin manufacturing the next-generation GeForce graphics processor this summer at IBM's state-of-the-art 300mm plant in East Fishkill, N.Y. The new IBM USD 2.5 billion chip-making facility combines, for the first time anywhere, IBM chip-making breakthroughs such as copper interconnects, silicon-on-insulator (SOI) transistors and low-k dielectric insulation on 300mm wafers. The new facility began operation last year, and will ramp up in capacity throughout 2003.
We have a deep customer collaboration with nVidia, the kind of support normally reserved for IBM's Server group and very select large OEM partners, said Michel Mayer, general manager, IBM Microelectronics Division. We understand that leading fabless semiconductor companies, like NVIDIA, need to get to market as quick as possible, with the latest technologies, yet need to keep their focus on their customers and products, not on manufacturing.
Beyond the chip manufacturing technology, IBM also offers an advanced automated management system that not only controls production on the factory floor, but provides a connection for customer and supplier systems and processes, allowing closer integration across the supply chain. IBM's automated management system provides NVIDIA with opportunities ranging from improved operation to greater efficiency and competitive advantage, while using e-business techniques to adapt to real-time, on-demand influences from the marketplace.