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The equally owned joint venture, called Advanced Mask Technology Center, will develop and pilot next-generation lithographic photomasks in a new facility in Dresden, to be completed by early 2003.
Photomasks are significant in the efforts of chip makers to produce ever smaller and more powerful chips for portable devices. Photomasks are quartz or glass plates containing precision images of chips, used as masters to transfer optically the images to the wafers on which the chips are manufactured.
The joint venture allows AMD and Infineon to produce smaller and better chips at a faster rate, spokesmen for the companies said. These chips could be used in portable computing devices.
The partnership with micro-imaging specialist DuPont Photomasks also means cost savings for Infineon, which announced the closure of its own photomask facility in Munich. AMD does not have its own photomask making facility.
About €360m (£225.2m) will be invested in AMTC over the next five years. The company should begin operations in the second half of next year and will employ about 170 people.