The deal will allow Chartered to delay the installation of a large volume of production equipment into its own 300-mm wafer fan in Singapore. Instead it will gain experience in 300-mm wafer processing at IBM's 300-mm fab in East Fishkill and drive up demand at that fab more quickly.

The companies announced the deal late today (November 26, 2002) saying that they plan to work together on 90-nanometer and 65-nanometer logic process technologies for foundry production on 300-mm wafers. Additionally the two companies said they might extend the agreement to cover 45-nm process technology.

The companies also said they expect to make use of each other's manufacturing capacity at 300-mm wafer fabs in East Fishkill and Singapore.

Although such teamwork, particularly in process development, has become common between major integrated device manufacturers (IDMs) and pure-play foundries, in this case two foundry operations are teaming to try and maximize economies of scale and time to reach leading-edge process technology both for themselves and their customers.

To assist foundry customers in designing with the technologies they develop, IBM and Chartered said they would work with third-party providers of design tools and open-standard formats in order to help their customers be able to move products between the two companies for production.

Under the reciprocal manufacturing arrangement Chartered will be able to offer its customers some capacity in IBM's latest 300-mm wafer fab in East Fishkill, New York, and IBM expects to evenutally utilize capacity in Chartered's 300-mm Fab 7 in Singapore to help meet additional future capacity requirements.

Financial details of the agreement were not disclosed.

"This agreement is intended to help our customers by making our advanced technologies more readily available for use in their applications," said John Kelly, senior vice president and group executive at IBM Technology Group, in a statement.

"Chartered customers gain an enhanced total product solution and earlier access to 90-nm technologies on 300-mm wafers," said Chia Song Hwee, president and chief executive officer of Chartered, in the same statement. "At the same time, this agreement affords Chartered the flexibility to defer the pilot production of our 300-mm Fab 7 until late in the third quarter of 2004, while still meeting our customers' needs and gaining 300-mm manufacturing experience," he said.

The agreement is also expected to add a layer of design support on to a foundry base for leading-edge technologies, the companies said.

The baseline 90-nm process technology is targeted for 300-mm wafer production in East Fishkill in the third quarter 2003. In order to assist customer product planning on next-generation technology, the companies intend to make details of their 65-nm development efforts known to customers in the fourth quarter 2003.