San Francisco, CA — International Business Machines Corp. has agreed to license chipmaker LSI Logic Corp.’s technology for converting sound, temperature and light into computer language for use in its own semiconductors, the fourth and most important such agreement LSI has yet signed. Details of the licensing agreement between LSI (LSI.N) and IBM (IBM.N), LSI’s largest competitor in the market for so-called application specific integrated circuits, such as royalty and fee payments, were not disclosed.
LSI Logic, a maker and developer of semiconductor and semiconductor-design libraries used in the wireless, communications, set-top box and communications industries, has already licensed this digital signal processor, or DSP, technology to communications chipmakers Broadcom Corp. (BRCM.O), Virata Corp. (VRTA.O) and closely held Brecis Communications. But this agreement is the most significant to date for LSI as it seeks to establish a common language for DSP chips so engineers do not have to customize their products — such as cellular phones — so they can work with different DSP chips from such makers as Intel Corp. (INTC.O) and Texas Instruments Inc. (TXN.N)
It is also part of the move by LSI, IBM and other chipmakers to move functions historically provided by many semiconductors onto one single chip, which saves money and cuts power use. National Semiconductor Corp. (NSM.N), headed by Brian Halla, has long carried a torch for such system-on-a-chip technology.
“The lack of this (open) architecture would have a more significant effect on our revenues going forward,” Wilf Corrigan, LSI’s chairman and chief executive told Reuters. “It’s really of strategic importance to our business and we’re not really doing this for revenues at this point.”
DSP chips have been among the fastest growing in the $200 billion global semiconductor industry as the use of such devices as cellular phones has proliferated. DSP chips help to convert such “real world” signals such as sound, temperature and light into the digital language used by computers and other chip-driven widgets.
“We’re incorporating DSP technology into our complex custom chip offerings to support the move away from stand-alone components to integrated system-on-chip designs,” said Christine King, vice president of semiconductor products for IBM in a statement.
Specifically, LSI has agreed to license LSI’s ZSP400 DSP core, software development and design verification tools. LSI’s largest customer is network computer maker Sun Microsystems Inc. (SUNW.O) and it is also a supplier of chips used in Sony Corp.’s PlayStation II video game console. “Even though we’re licensing competitors (such as Broadcom and IBM), in some cases the expansion of the market is more important than the fact that you’ve got competitors in that market,” Corrigan said.
LSI, based in Milpitas, Calif., had 1999 sales of $2.1 billion and was founded by Corrigan, a Silicon Valley engineering veteran, in 1981. The company will report fourth-quarter and year-end earnings on Tuesday, after the close of trading. LSI stock has fallen more than 70 percent since hitting a record high of $90.38 on March 10, sinking with other high-tech stocks. Year-to-date, the stock has risen 17 percent, compared with a 25 percent rise in the Philadelphia Semiconductor Index. The stock closed up 2 cents at $24.99 on Friday in trading on the New York Stock Exchange.