IBM lands $100m military chip design deal

A deal with Raytheon will expand IBM's custom-chipmaking business, which already manufactures graphics processors and mobile-phone chips, to include military systems

IBM and military technology maker Raytheon said on Tuesday they will collaborate on designing and marketing customised chips and systems for use in aerospace and the military, a deal that could be worth $100m (£64m) to IBM over five years.

The relationship is designed to combine Raytheon's focus on military and aerospace electronics with IBM's expertise in chip design, software development, large systems computer architecture and network integration, the companies said.

The deal cements an ongoing relationship between IBM and Raytheon. In July, IBM landed a professional services deal with Raytheon division Raytheon Aircraft, representing a win for IBM's drive to expand its high-margin professional services business. This side of IBM's business was given a boost through the company's acquisition of the consulting services arm of PricewaterhouseCoopers last year.

IBM has also been ramping up its custom chip-design business in recent months, aiming at high-end clients willing to pay a premium for customised chips and advanced manufacturing processes.

Raytheon recently participated in the creation of the Institute for Soldier Nanotechnologies, launched by the Massachusetts Institute of Technology and the US Army, which is geared toward creating battlefield armour for the 21st century.