Chi­nese firms join IBM’s new chip-tech group al­liance

China Daily (Canada) - - ACROSSAMERICA - By MICHAEL BAR­RIS in New York michael­bar­ris@chi­nadai­lyusa. com

Chi­nese com­pa­nies’ par­tic­i­pa­tion in an In­ter­na­tional Busi­ness Ma­chines Corp chip-tech­nol­ogy al­liance gives them the abil­ity to cus­tomde­sign chips that power a grow­ing econ­omy, an­a­lysts said.

e US in­for­ma­tion-tech­nol­ogy gi­ant’s re­cruit­ing of tele­com equip­ment maker ZTE Corp, server maker In­spur Group Co and other Chi­nese tech­nol­ogy providers is the lat­est step in a plan un­veiled last sum­mer to al­low many com­pa­nies to li­cense IBM mi­cro­pro­ces­sor de­signs based on the com­pany’s “Power” tech­nol­ogy, a key step in IBM’s ef­fort to broaden the tech­nol­ogy’s ac­cep­tance.

“IBM must find additional rev­enue sources through new mar­kets and part­ners or they will strug­gle to fund the sub­stan­tial de­vel­op­ment costs needed to de­sign fu­ture Power pro­ces­sors,” Moor In­sights & Strat­egy se­nior con­sul­tant Karl Fre­und wrote in a re­search ar­ti­cle.

For years, the de­signs ex­isted only in the Ar­monk, New York-based com­pany’s own server sys­tems. Un­der the al­liance, dubbed “OpenPOWER”, li­censees can in­clude IBM-de­signed cir­cuitry in their own chips. Al­liance mem­bers work on re­lated prod­ucts such as servers, net­work­ing and stor­age de­vices. With IBM rev­enue slump­ing, “the stakes could not be higher,” Fre­und wrote.

From 2002 to 2012, IBM’s share of the mar­ket for the widely used Unix multi­user op­er­at­ing sys­tem jumped to more than 55 per­cent from 14 per­cent, on the back of the speedy Power ar­chi­tec­ture. Amid de­clin­ing de­mand for Unix-based servers, IDC sees Unix server rev­enue slid­ing to $8.7 bil­lion in 2017 from $10.2 bil­lion in 2012. Unix mar­ket share is seen plung­ing to 9 per­cent of server rev­enue in 2017 from 16 per­cent.

IBM de­cided last sum­mer to re­boot the tech­nol­ogy by open­ing it to high-tech al­lies who could tai­lor it to par­ties’ spe­cific needs. Google Inc joined in Au­gust. In Jan­uary, China’s Suzhou Pow­erCore Tech­nol­ogy Co and the Re­search In­sti­tute of Jiangsu In­dus­trial Tech­nol­ogy signed on.

Suzhou Pow­erCore agreed to li­cense IBM’s Power ar­chi­tec­ture, in­tel­lec­tual property re­lated to its fast Power8 pro­ces­sor, and chip de­sign tools to de­velop and mar­ket pro­ces­sors for spe­cial­ized servers in China.

The Re­search In­sti­tute of Jiangsu In­dus­trial Tech­nol­ogy said it would pro­mote and help de­velop Power in Jiangsu prov­ince and through­out China. ZTE and In­spur will be pro­duc­ing chips to meet grow­ing de­mand and sat­isfy se­cu­rity re­quire­ments, al­liance pres­i­dent Bradley McCredie told China Daily.

The al­liance’s seven Chi­nese mem­bers are ZTE, Re­search In­sti­tute of Jiangsu In­dus­trial Tech­nol­ogy, In­spur, Team­sun, Chuanghe Mo­bile Co, Suzhou Pow­erCore Tech­nol­ogy Co and Ver­iSil­i­con.

Fre­und said re­cruit­ing the Chi­nese com­pa­nies was im­por­tant to IBM be­cause of the size of the po­ten­tial Asian mar­ket. “IBM likely is tar­get­ing the large Chi­nese data cen­ters such as Ten­cent, Alibaba, Baidu, and China Tele­com,” which have “deep col­lab­o­ra­tive re­la­tion­ships with In­tel”, he wrote.

An­a­lyst Ti­mothy Prick­ett Mor­gan said par­tic­i­pa­tion is a way for the Chi­nese com­pa­nies to flex some of that mus­cle in their busi­ness deal­ings with the US com­pany. The big tech com­pa­nies in China want to have some sort of say in how Power-based ma­chines are de­signed and they don’t just want to buy boxes from Big Blue, ac­cord­ing to Mor­gan. That is one rea­son why Suzhou Pow­erCore has li­censed the Power8 chip specs and is work­ing on its own vari­ants for servers, stor­age, and other data cen­ter prod­ucts.

Tom Rosa­milia, IBM’s sys­tems and tech­nol­ogy gen­eral man­ager, said the com­pany has “had a very suc­cess­ful busi­ness in China around our Power tech­nol­ogy for quite some time now. It is ob­vi­ously a big mar­ket for us and for all the world.”

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