IBM will manufacture the chips at its fabrication plant in Burlington, Vermont, on behalf of smart chip designer Infineon Technologies.
Officials at Germany-based Infineon said handing off manufacturing to Big Blue's U.S. facilities will allow the chips to be used in American military and security environments.
"Manufacturing at the IBM Trusted Foundry enables us to meet the specific needs of the U.S. government for in-country production from a security certified, high-volume, high-quality source," said Joerg Borchert, VP for Chip Card & Security at Infineon North America, in a statement.
"Our plant in Dresden, Germany, has provided ICs [integrated circuits] for the U.S. ePassport since 2006. We now have a U.S. site that is fully qualified to supply security microcontrollers and related products with the highest levels of security in a production IC today," said Borchert.
IBM and Infineon have been collaborating on smart chip systems since 2007. The chips produced at IBM Burlington will include 130 nanometer embedded Flash technology on Infineon's SLE 78 architecture, which features the company's Integrity Guard security hardware.
"Infineon is committed to providing a trusted supply chain that protects the integrity of every ID program that uses our products," said Infineon Chip Card & Security division president Helmut Gassel, in a statement.
Financial terms of the arrangement were not disclosed. IBM shares were up .54%, to $130, in midday trading on the New York Stock Exchange Wednesday.