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UMC obtains IBM license to develop 20-nanometer chips

TAIPEI -- United Microelectronics Corp. (UMC), the world's second largest contract chip maker, said Friday it has obtained a technology transfer from U.S.-based high-tech giant IBM to expedite development of semiconductors using the sophisticated 20-nanometer process.

Under the agreement, IBM will license its 20nm process design kit and FinFET (FinField effect-transistor) 3D technology to UMC in a bid to accelerate the Taiwanese firm's efforts to supply its customers with next generation chips.

UMC said its internally developed 20nm planar process will be aligned with IBM's design rules and process/device targets, while UMC will provide FinFET technology as a low-power option for mobile computing and communications products.

The collaboration between the two companies will take place at UMC's research and development center in the Southern Taiwan Science Park, the Taiwanese firm said.

“We are happy to engage with a recognized technology leader such as IBM for this technology advancement effort,” said IC Chen, UMC vice president for advanced technology development, in a statement.

“UMC's position as a world-leading foundry involves timely introduction of leading-edge processes to enable next-generation customer chip designs,” Chen said. “Leveraging IBM's technology expertise to shorten our 20nm and FinFET R&D cycle will create a win-win situation for UMC and our customers.”

However, UMC did not disclose the financial terms of the deal.

Several leading global foundry operators, including UMC and rival Taiwan Semiconductor Manufacturing Co. (TSMC), are gearing up to enter the 20nm business turf to boost their competitiveness.

TSMC has announced that by the end of the year, it will assign US$70 million (NT$2.09 billion) from its capital expenditure for the development of semiconductors on the 20nm process. Meanwhile, UMC declined to comment on recent media reports that it has secured orders from Qualcomm Inc., a cell phone chip supplier in the U.S., for contract production of chips on the 28nm process.

With TSMC's supply of 28nm chips falling short of market demand, Qualcomm has turned to UMC for production, the reports said.

UMC said it usually does not comment on specific customers, but forecast that 28nm chips will account for 5 percent of its total sales in the fourth quarter of this year.

For its part, TSMC said earlier that it has been trying hard to expand its production of 28nm chips, with the expectation that they would make up more than 20 percent of its sales in the fourth quarter, up from 5 percent in the first quarter.

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