IBM Corp. announced yesterday that it will work with General Electric Co. to develop customized computer chips, a move analysts called a new step in the computer giant's efforts to keep competitive by getting technology from the outside.
The resulting chips will be produced by GE for IBM's exclusive use. However, GE will be able to use designs similar to those that it develops with IBM to produce chips for other customers.
GE said yesterday that it is particularly interested in using the deal, which is to run into the early 1990s, to develop a long-term market for automobile components. New cars are making increasing use of chips in a variety of internal systems such as climate control and small electric motors.
"We're trying to get designed into cars that are going to be seeing the road in the early to mid-'90s," said GE spokesman William Dantini. Discussions with auto makers have begun, the company said.
Terms of the agreement were not disclosed, but Dantini said it involved a significant amount of money. He suggested it would give added credibility to GE pronouncements that it will stay in the semiconductor business. Some industry analysts have speculated that GE would cease chip operations.
GE's semiconductor wing, which includes plants and facilities acquired in the takeover of RCA Corp., has annual sales of about $600 million and was profitable last year, the company said.
Analysts suggested that the agreement shows that IBM, long known for favoring its own resources, is taking a more flexible view of what other companies have to offer. "They have killed NIH," said Michael Geran, vice president of research for E.F. Hutton & Co. referring to the philosophy that there is no use for anything "Not Invented Here."
"They want to speed up. They want to be more competitive," Geran said.
Geran suggested that IBM was particularly interested in the capabilities of the RCA facilities that GE had taken over.
IBM acknowledges that it is trying to become more open. "We have no patent on success," said James Cypher, a company spokesman. "Other people are doing good, smart things, too."
IBM recently entered into an agreement with Rockwell International to investigate using gallium arsenide, a compound that has possibilities as a substitute for silicon, in semiconductor fabrication. It is also conducting cooperative research with the British firm Oxford Instruments on use of X-rays in making chips.