US Report: IBM takes on TI

IBM said on Wednesday it would compete directly with Texas Instruments in the digital signal processor market for cellular phones.

IBM said in a statement the move is part of a $100m (£61m) investment in initiatives to help fuel its custom microchip business. The investment centers on the addition of more than two dozen chip "cores," including one that provides full compatibility with a Texas Instruments digital signal processor (DSP), IBM said. The core is a component reportedly found in about half the world's cellular phones.

Texas Instruments controls roughly 45 percent of the $3.13bn (£1.92bn) global DSP market. According to the Wall Street Journal, by offering the technical data instead of off-the-shelf chips, and competing head-to-head with Texas Instruments, IBM hopes its clients will order custom-made chips.

Other custom chip investments by IBM include an expansion of its Burlington facility for making "masks" -- stencils used to transfer circuit designs onto chips. In addition, the company is adding design engineers and expanding support for popular design software to help manufacturers integrate IBM custom chip technology into a broader variety of electronic products.

The custom chip industry is likely to grow from $21bn (£12.9bn) at present to $52bn (£31.9bn) by the year 2002, IBM said.

IBM said that in recent months its manufacturing technology has helped propel it from No. 5 to No. 2 in worldwide sales of ASICs (application-specific integrated circuits)