Tundra Semiconductor Corp. this week signed a licensing agreement with IBM Corp., in which Big Blue’s global engineering team would design a processor core in 65 nanometre technology.

Ottawa-based Tundra, whose product line includes switches, bridges and power controllers, plans to use the core as the processing engine of its System InterConnect product line. IBM agreed in August to design 90nm products for Tundra.

Tundra also announced this week a sharp decline in sales. Revenues for the quarter ending Oct. 28 were $17.9 million, down 19 per cent from nearly $22 million during the same period in 2006. The vendor attributed the drop to the rise of the Canadian dollar relative to American dollar, and “lower than expected” sales of communications products. In an effort to cut costs, Tundra has eliminated 30 positions.