IBM and BASF have teamed up to develop 32nm chips scheduled to hit the streets by 2010. 

Under the agreement, BASF will provide research and personnel from its chemical research unit in Germany. In parallel IBM will work out of its Yorktown Heights facility in New York to develop a lithography process to produce the 32nm chip.

The aim is to combine new technologies from each company to develop a lithography process precise enough to allow 32nm chip production.

Chipmakers use lithography to design and etch a chip's circuits. Smaller, more precise, methods allow chipmakers to draw smaller circuits with more transistors, resulting in higher performance and less energy consumption.

Big Blue is currently lagging behind Intel, which plans to release its first 45nm chips later this year.  

IBM's 45nm programme, which is being carried out in partnership with Toshiba, Sony and AMD, will not yield a 45nm chip until 2008. Intel hopes to unveil its first 32nm chips in 2009.