Tuesday, September 23, 1997

Chip rivals scramble to catch up to IBM's switch to copper

By DAVID E. KALISH

AP Business Writer

NEW YORK (AP) - For more than a decade, computer chip makers have sought an alternative to the aluminum long used to make the tiny circuits that are the brains of computers and electronics equipment.

IBM on Monday beat chip rivals by at least a year.

International Business Machines Corp. confirmed it found a way to switch to copper from aluminum, an important advance that could lower prices and improve performance for a variety of business and consumer computers.

Within three years, copper is likely to become the industry's metal of choice, not just for machines and chips made by the Armonk, N.Y.-based company. Analysts expect rivals such as No. 1 chip maker Intel Corp. to speed their timetables for switching to copper.

"I think it will change Intel's plans. Intel will now realize they need to step on the accelerator and get to copper sooner," said Drew Peck, an analyst at Cowen & Co. in Boston.

Copper carries electrical signals faster but can contaminate the silicon surface of the thumb-nail size chip. Aluminum has been used since the microprocessor industry was born more than three decades ago.

IBM developed a special insulation to put between the copper and the silicon base. In addition, IBM designed a new way to flatten the copper that permits the layering of many wires inside chips.

Wall Street welcomed IBM's breakthrough. The company's stock soared nearly 5 percent on the news, leading the Dow Jones industrial average to a nearly 80-point gain. IBM stock ended up $4.62-1/2 to $103.87-1/2 on the New York Stock Exchange.

Sematech, a 10-year old chip consortium financed by 10 American chip makers, including IBM, recently said it developed a technique for applying copper to the surface of silicon wafers. But analysts said commercial applications from that effort were at least three years off.

The IBM process "is going to raise all boats, so to speak, with anything you build out of silicon," said Linley Gwennap, editor of the Microprocessor Report, a newsletter based in Sebastopol, Calif.

Intel had planned to come out with copper chips after 2000. After word of the IBM breakthrough surfaced in recent weeks in trade publications, the Santa Clara, Calif. company began telling analysts it would come out with copper chips as early as 1999.

Still, Intel said through a spokesman it wasn't stepping up its already aggressive plans. But Intel would check out details of IBM's technique to "see if there are ways to improve ours," said the spokesman, Howard High.

Analysts said IBM's chips shouldn't pose a big threat to Intel, whose microprocessors are used in 85 percent of the world's personal computers. Instead, they should help IBM compete against Hewlett-Packard and Sun Microsystems in business computers that perform extremely demanding tasks, such as processing millions of customer transactions each day.

IBM plans to start selling copper chips early next year. It will include the copper in chips that are the tiny brains and storage bins of computers it sells as well as in chips it sells to other computer and electronics makers.

However, the company has no immediate plans to license its technology to other chip makers.

The copper carries signals between the millions of transistors packed into each chip. IBM said switching metals could speed up a microprocessor by up to 40 percent, resulting in computers that think faster and store more information. In addition, the new chips are up to 30 percent less expensive than aluminum versions. That's partly because copper is slightly cheaper but mainly due to the simpler process and less expensive machinery needed to make the semiconductors.

In addition, the technology will enable chips to operate on less electricity, making them useful for laptop computers and other battery-operated electronics products.

The advance stands out among recent announcements by chip makers to boost the performance of circuits that control the basic functions of computers and electronics devices. Last week, Intel unveiled a way to boost the storage capacity of "flash memory" chips, the circuitry that lets computers and other devices hold information even when they're turned off.

As efforts to squeeze more information on a chip clash with physical laws, manufacturers have been forced to come up with more and more creative methods.

"Aluminum wouldn't have been able to carry enough electricity to keep up the pace. We just broke through one of the fundamental walls," said John Kelly, vice president for technology in IBM's chip division.

IBM said its new manufacturing process enables it to make transistors more than 500 times thinner than human hair, or about 30 percent smaller than the circuitry in the most sophisticated chips now available.