Found this interesting article: SUNNYVALE, Calif. (CBS.MW) -- AMD has turned to IBM for help in pushing its microchips to advanced technologies during the next several years. The two companies announced a joint-development agreement with undisclosed financial terms on Wednesday that lets AMD access IBM's leading-edge East Fishkill, N.Y., research and development plant. Analyst Eric Rothdeutsch with Friedman, Billings, Ramsey said this deal gives AMD a good path as IBM is the leader in developing advanced process technology. "AMD benefits more by having IBM as a partner." Rothdeutsch said IBM will benefit by getting to test out its advanced processes on high-volume microprocessors, the brains of computers. He also said IBM probably will receive a certain amount of cash from AMD. AMD will work with IBM to develop chips with transistors spaced 65 nanometers and 45 nanometers apart. The chips will be manufactured on 12-inch wafers. The current industry standard is 180 nanometers while the most advanced chips have transistors spaced 130 nanometers apart. A nanometer is a billionth of a meter. The tighter transistors are spaced, the more efficiently a chip operates. However, it is expensive and difficult to develop processes capable of manufacturing these advanced chips. "This deal fulfills two primary things for us: we are delivering the best performance and functionality to our customers while doing it at reduced costs," said AMD spokesman Rob Keosheyan. AMD said it should be producing chips at 90-nanometer spacing by the end of this year and that chips stemming from the IBM development agreement at 65 nanometers should debut in 2005. Tom Smith, analyst with Standard & Poor's, said AMD bolsters its technology profile with this deal, especially since its main competitor, Intel (INTC: news, board), is the largest chip company in the world. "AMD has consistently had trouble going up against the Goliath that is Intel," Smith said. The deal allows both companies to take jointly developed technology back to their own plants or manufacturing partners. AMD has a pact with Taiwanese foundry United Microelectronics (UMC: news, board) to build an advanced semiconductor plant in Singapore. The plant would cost about $3 billion and is scheduled to open in 2005 but the future of it has been in question due to AMD's financial situation. AMD's Keosheyan said the UMC deal is still valid, although the joint development aspect of it is being "wound down." He also said the foundry arrangement remains in place, but that AMD is evaluating its options regarding the actual fabrication plant. This agreement could set up IBM in a position to become a foundry for AMD. The AMD spokesman would not comment on that possibility but IBM has been active in pushing its foundry operations since opening its East Fishkill factory. IBM currently ranks as the world's fourth largest semiconductor foundry. It also manufactures its own broad array of semiconductors and ranks 12th in the world as a supplier of chips. The foundry part of IBM's microchip business is expected to grow as Big Blue proves its capability on advanced process technologies, which are very difficult and expensive to develop. "We're definitely seeing really good demand for our advanced process technologies," said IBM spokesman Scott Sykes. "Silicon-on-insulator is really important for advanced chips and we do it really well. These are the kinds of things that are attracting customers for us."