International Business Machines' announcement yesterday that it will join Japan's Toshiba Corp. and Germany's Siemens AG to develop advanced computer chips demonstrates how nationalist competition is giving way to international alliances fueled by financial and technical necessities.
As in another international venture announced yesterday -- a $700 million deal between Fujitsu and Advanced Micro Devices -- sharing costs was a key factor in the IBM-Toshiba-Siemens deal. The three companies together will spend about $1 billion to develop advanced semiconductors and manufacturing processes.
But the agreement also shows that the increasing complexity of advanced electronics products has made it almost impossible for even the strongest companies to master every aspect of major new technologies. The deal also should serve as an interesting test of whether three global powerhouses can collaborate on specific technologies even as they remain rivals in closely related areas.
Many observers applauded the fact that the IBM-Toshiba-Siemens deal will be centered at IBM's chip factory and research center in East Fishkill, N.Y.
"This is a dynamite piece of news," said Lewis Branscomb, a former IBM chief scientist who now heads the science, technology and public policy program at Harvard University's Kennedy School of Government. "The fact that they are doing this in East Fishkill shows that IBM is leading not from weakness, but from strength."
Michael Borrus, co-director of the Berkeley Roundtable on the International Economy, said that the agreement should help shift the debate over technology policy away from the "us-against-them" approach and toward a more reasoned analysis of how U.S. industry can maintain access to critical technologies.
International collaboration in high technology has been accelerating since the mid-1980s, with companies in industries ranging from computers to electrical equipment and biotechnology building a broad variety of cross-border relationships.
In the computer business, for example, Apple Computer is working with a number of Japanese companies -- notably Sony, Sharp and Toshiba. Digital Equipment recently agreed to buy an interest in Olivetti of Italy. In the semiconductor industry, partnerships include Motorola and Toshiba, Texas Instruments and Hitachi, and AT&T; and NEC -- even though American and Japanese chip companies have long been at odds over alleged unfair trade practices by the Japanese.
Recently, there have been a spate of agreements linking American and Japanese companies for the production of so-called "flash" memory chips, which are expected to become the storage medium of choice for portable computers and some new consumer electronics goods.
Earlier this year, Intel Corp. and Sharp Corp. agreed to work together on flash memories. And yesterday, Intel's arch-rival, Advanced Micro Devices, announced its joint venture with Fujitsu to build its own flash memories at a new factory in Japan.
The agreement also calls for the two companies to invest in one another's stock in amounts not to exceed 5 percent.
"This is the largest investment in facilities ever for AMD," said AMD Chief Executive W. J. Sanders III. "It must be a success." Mr. Sanders has been a harsh critic of Japanese trade practices, but says that there is no contradiction between fighting the Japanese on one front while cooperating on another.
IBM is already working with Toshiba on projects involving flash memories and flat-panel computer displays. In addition, IBM is working with Siemens to manufacture memory chips that hold 16 megabits of information, and in designing 64-megabit chips.
But the agreement announced yesterday goes much further, linking the three companies to develop a new generation of 256-megabit chips -- capable of storing the equivalent of a dozen thick novels -- along with the underlying production technologies, which in turn will be used for many other products. The chips are expected to hit the market toward the end of the decade.
Analysts said that IBM's existing links with Toshiba and Siemens were an important starting point, but that the three companies still face a number of technical and managerial challenges.
For starters, the engineering problems associated with building a 256-megabit chip are considerable. The circuit lines on each chip will be just 0.25 of a micron wide, a distance so small that traditional photographic techniques for imprinting those lines cannot be used.
Although IBM, with help from Motorola, has invested some $1 billion on a new chip-making technology that uses X-rays instead of light, the new alliance will focus on a variety of techniques for extending the existing technology. That sets up a potential conflict among different research teams within IBM.
In addition, IBM is a crucial supporter of Sematech, a government-backed consortium of U.S. chip makers that is devoted to shoring up the struggling U.S. chip-equipment business.
IBM, Toshiba, and Siemens will jointly develop the basic process technologies for advanced chips, but then will go their own ways in implementing those processes.
IBM will presumably be working with Sematech-supported American companies while Toshiba works primarily with chip-making companies in Japan.