`Fortress IBM' Forms Alliances


FOR years, International Business Machines Corporation was the ``lone ranger'' of American high technology. The company sought to maintain its competitive edge by shunning ties with other firms and fiercely guarding its technology. So secretive was IBM that engineers dispatched by suppliers to help install equipment often were denied entry to IBM facilities.

Today, the ``lone ranger'' philosophy no longer holds sway at Big Blue. With the world market for computer memory chips in the grip of Japanese firms such as Fujitsu and NEC, IBM is reversing its isolationist technology policy, and forming strategic alliances with other firms.

``The company realizes it can't stand by itself any more,'' says Michael Borrus, an expert at the Berkeley Roundtable on the International Economy.

Today scientists and engineers from West Germany's giant Siemens A. G. are working with IBM personnel to develop the world's most advanced computer chip. IBM is also sharing its research into X-ray lithography, a promising chip-making technique, with scientists from Motorola.

In the past, IBM relied on its superior in-house semiconductor technology to help ensure the continued competitiveness of its electronic products. IBM beat all Japanese firms in the race to use 1-megabit and 4-megabit chips (the most advanced now in use).

But Japan's electronics giants have nearly closed the technology gap, and IBM officials have concluded that developing future generations of semiconductors will be so costly and risky that not even IBM can succeed on its own.

``Through alliances we are attempting to minimize the risks and costs while staying on the competitive curve,'' says Michael Attardo, president of IBM's general technology division.

IBM is working with Siemens to develop a 64-megabit memory chip, which is equal to 4,000 pages of double-spaced text. Protecting US firms

IBM officials have watched with growing alarm as Japanese firms have come to dominate the memory chip market. Though IBM is the world's largest manufacturer of semiconductors, it is not self-sufficient. The company must buy chips from the very Japanese companies that produce computers competing with IBM machines. Just as IBM has done in the past, any of those firms could exploit a future advantage in semiconductor technology to enhance their electronic products, while delaying shipments to IBM and other competitors.

Of equal concern to IBM officials is the weak condition of the American firms that supply equipment and materials used to make semiconductors. As US chip makers have lost market share, US equipment manufacturers have lost their customer base. Japanese companies like Nikon and Canon now dominate critical segments of the semiconductor equipment market, especially the photolithography machines used to etch circuit lines on chips.

To reduce dependence on Japanese firms for memory chips and chip-making equipment, IBM hopes to strengthen the American companies that make those products. To that end, IBM is now licensing its chip designs, providing financial assistance, and sharing its research with a host of American firms. Siemens deal

The IBM-Siemens deal, announced last January, took months to negotiate, as both firms dispatched delegations of scientists to investigate where the other stood in semiconductor research. Anxiety over revealing secrets was eased by the relationship the firms had already forged.

Two years ago IBM sold most of its Rolm telecommunications subsidiary to Siemens, but retained a stake in the sales and service operations. ``Through the Rolm venture we became aware of their very fine semiconductor technology,'' says Dr. Attardo. ``That fostered the synergy we see today.''

To increase supplies of current-generation chips, IBM has licensed its 4-megabit design and production technology to Micron Technology, one of only three US firms still making memory chips. In exchange IBM gained access to Micron's techniques for low-cost manufacturing. IBM officials say they may license 4-megabit technology to other US firms.

Earlier this year, IBM began sharing its X-ray lithography research with Motorola, and forged two consortia of American firms to purchase two divisions of Perkin-Elmer, a maker of lithography equipment that decided to leave the field.

You've read  of  free articles. Subscribe to continue.
QR Code to `Fortress IBM' Forms Alliances
Read this article in
QR Code to Subscription page
Start your subscription today