IBM says corner turned on chip yield problems

IBM has "turned the corner" on yield problems at its new 300-milllimeter chip fabrication facility in New York, and expects to do a better job of meeting customer demand this quarter, executives said Wednesday in a conference call to update reporters on its technology.

"We still are not quite to our target, but we are getting very close," said John Kelly, senior vice president and group executive in IBM's Systems and Technology Group, which includes storage, servers and semiconductors. Specifics regarding the targets and precisely how close IBM is to meeting them were not offered, although Kelly did say that "lately, our defect densities have been improving quite rapidly."

Yield is the number of working processors that can be cut from a silicon wafer, and became an issue during IBM's first quarter, when the IBM Microelectronics business lost US$150 million. Yields must improve in the current quarter for the group to turn a profit, said John Joyce, the company's senior vice president and chief financial officer in an April 15 conference call detailing the first-quarter results.

IBM manufactures the PowerPC 970FX processor used in Apple Computer's XServe at the plant. IBM officials Wednesday declined to comment on criticism from Apple, whose executives cited a chip shortage from IBM as a cause for lower XServe G5 shipments in its second quarter, but said that the expectation is that customer demand will be better met this quarter.

Yield problems are not uncommon when a new process technology is put into place, analysts have said. However, most chip makers do not publicly speak of chip yield problems, which has made IBM's doing so all the more significant.

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