IBM chip group struggles

Apple's G5 processor supplier IBM is facing yield problems at its new manufacturing facility in East Fishkill, New York. IBM's chip business has lured high-profile customers away from foundries in Taiwa, including Taiwan Semiconductor and United Microelectronics. However, the business remains unprofitable, in part due to yield issues cited by John Joyce, senior vice president and chief financial officer at IBM last week.

A chip maker's yield is the number of working processors that can be cut from a silicon wafer. In the first quarter of 2004, IBM Microelectronics lost about $150 million, Joyce said. Joyce also said yields would have to improve in the second quarter for the Microelectronics group to make a profitable contribution to the Systems and Technology Group. Yield is seen by customers and financial analysts as an indicator of the health of a company's manufacturing technology because it costs the chipmaker a fixed amount of money to produce a wafer regardless of whether that wafer generates one working chip or thousands. Most chip companies decline to discuss poor yields in public.

News source: Macworld | UK

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