IBM spins off PowerPC trio

IBM on Tuesday sold three of its PowerPC processors as part of a licensing deal with Applied Micro Circuits, a 25-year-old networking and storage chip company.

Under the agreement, IBM will transfer its PowerPC 403, 405 and 440 processors to Applied Micro. The latter will gain the rights to market the chips as standalone products for the embedded sector, meaning they could be used in products such as networking gear, an IBM representative said.

The San Diego-based chipmaker will pay IBM $227 million for the chips and a Power architecture license. "Power" is IBM's term for the common technological underpinnings shared by all of IBM's Power and PowerPC chips.

The deal is expected to close by the end of the quarter.

Although IBM will be giving up control of a good part of its PowerPC 400 family--one of its three standalone PowerPC chip lines--to Applied Micro, Big Blue sees the deal as an opportunity to foster wider distribution of its PowerPC chips.

"It's consistent with our goal of finding new ways to open up the Power architecture to new partners and also more customers," an IBM representative said.

IBM, which has many Power architecture processors, including its Power4 server chip and its PowerPC 700 and PowerPC 970 chip families, has been making an effort lately to increase the presence of Power chips in the computer, communications and electronics markets.

Just two weeks ago, IBM made public a plan to give hardware makers and software developers more access to information and development tools for Power chips, which will aid them in creating new products and software for Power-based devices.

Big Blue's plan is to foster an open marketplace for its Power chips--one in which companies will create and purchase hardware and software for the Power product lines and devices that use them. The company sees this environment as one in which users of Power chips will regularly offer feedback on features and enhancements they would like IBM to add in the future, the company said.

IBM has made a number of changes to its chip business recently, including establishing a chip foundry business and combining its microelectronics and server groups into a new systems and technology group.

Although Applied Micro will market the three standalone chips, IBM will retain some standalone PowerPC 400 chips for applications such as digital video processing, and it will retain all of the patents related to the PowerPC 400 family. Big Blue will still be able to use the PowerPC 403, 405 and 440 processor cores in custom chips, which it designs for other companies under contract, the IBM representative said.

IBM will be Applied Micro's PowerPC chip manufacturer, the companies said.