"(Signing with IBM) gives our customers confidence that IDT will have adequate supply to meet their requirements," said Len Perham, IDT (IDTI) president and CEO, in a statement.
IDT, in Santa Clara, Calif., is a fledgling rival to Intel Corp. (INTC) Its first processor, a Pentium-class chip called the C6, shipped about 100,000 units last quarter. IDT's aim is to grab the low end of the notebook market, with hopes of getting 5 percent of the overall market.
The three-year deal with IBM will start this fall. IBM will build IDT's next-generation processor, the C6+, which was introduced last October. The C6+ will add more power, especially good for three-dimensional graphics, by adding a set of instructions similar to those found in AMD's K6-3D processor.
The C6+, a 5.8 million transistor chip, will be compatible with today's motherboards, not Intel's Slot 1 architecture.
Can IBM meet demand?
For companies such as AMD -- which has had chronic production problems -- contracting with IBM gives customers confidence that it can meet demand. IDT hopes to gain enough cachet to sell up to 2 million processors this year.
"IBM has leading-edge technology and a proven track record in producing these types of devices," said Linley Gwennap, editor of the Microprocessor Report in Sunnyvale, Calif.
But with x86 sales expected to reach 100 million units this year, IBM may be hard-pressed to supply the 25 percent of the market Intel's three rivals hope to take.
AMD, in particular, is already selling every processor it can manufacture, and IBM's priorities may cause problems for IDT.
"Someone has to be at the bottom of IBM's list," said Gwennap. With previous obligations to AMD and Cyrix -- a subsidiary of National Semiconductor -- IBM could have problems meeting orders if demand shot up, he said.