View Full Version : IBM says chip flaws decline, but still off target

May 12, 2004, 03:51 PM
IBM says chip flaws decline, but still off target (http://biz.yahoo.com/rc/040512/tech_ibm_1.html)
NEW YORK, May 12 (Reuters) - International Business Machines Corp. (NYSE:IBM - News) executives said on Wednesday that production of chips at its closely monitored new plant is improving, but has not yet reached its target.

Armonk, New York-based IBM spent more than $3 billion to build the East Fishkill, New York, plant where it is using the latest technology to make chips for companies such as video gaming chip company Nvidia (NasdaqNM:NVDA - News) and Apple Computer Inc. (NasdaqNM:AAPL - News)

But last quarter, yields, or the production of useable chips that have no flaws, fell, and the operations lost money.

Wall Street keeps a close watch on the company's chip business because although its revenues are small in comparison to its other services, hardware and software sales, its operating results can swing profits one way or the other. IBM has vowed that the unit will be profitable by year end.

Speaking during a briefing by telephone, John Kelly, who runs IBM's chip business, said that in the past few months the number of flaws found in the chips it makes have decreased.

"Lately our defect densities have been improving quite rapidly," Kelly said. The facility started off last year with good improvements in its production of useable chips, but that then declined due to some design issues, he said.

"We seem to have turned the corner on those (design issues). We believe we understand them and we are now making rapid progress on them. But we still are not quite to our target -- to our objective -- but we are getting very close," Kelly said.

He was echoing remarks from IBM's former chief financial officer, John Joyce, who said during the company's mid-April earnings conference call that lower yields in its new plant contributed to the division's $154 million loss.

IBM has been struggling to bring its chip division to profits even as its competitors such as Intel Corp. (NasdaqNM:INTC - News) have recovered from the worst downturn on record for semiconductors. It recently combined its computer servers and storage with microchips and that group is co-headed by Kelly and William Zeitler.

Apple complained last quarter that IBM's inability to deliver enough chips had caused problems for its Xserve G5 computer. Kelly said during the call that IBM expects to be able to better meet customer demand this quarter.

"We do expect to do a better job of meeting our customer demand here in the second quarter and we expect that we will do better and better as each quarter goes on," he said.

Sun Baked
May 12, 2004, 03:57 PM
Originally posted by stingerman on ARS: (http://episteme.arstechnica.com/eve/ubb.x?a=tpc&s=50009562&f=8300945231&m=9080959175&r=759005334631#759005334631)

It says 130NM but at the same time it says 300MM. This chart is for the Fischkill plant. It was filed today with the SEC.


Here is John Kelly's script for this slide:

Slide 8
Much has been written on our yields recently. I want to take a minute to let you know where things stand.

As our CFO, John Joyce, said when we reported our first quarter earnings, our 200 mm yields are at or above plan while our

300 mm yields, while improving, are not yet where we want them to be.

The next chart illustrates those comments. As you can see, our 130 nm, 300 mm defect densities the number of defects in a given section of silicon are showing rapid improvement. As you can see, we are getting much closer to where we want to be.

It's important to point out here that we are working on extremely complex logic. At a given lithography node we can provide up to 20 percent higher speeds than our competition, though in some cases these advanced chips are more difficult to yield. And while the traditional foundries currently have less than 20 percent of their volumes in 130 nm or smaller, about 50 percent of our volumes are 130 nm or below.

As John Joyce suggested, we expect to do a better job of meeting customer demand in second quarter

May 12, 2004, 04:21 PM
Guess that means that they're producing the small chips on 300mm wafers, with the 200mm wafers being reserved for less cutting edge products.

Thanks for the graph, Sun Baked. And hey, if that trend continues, maybe they'll actually be beating yield targets for the G5 some month soon. That'd sure be nice, and might even lead to cheaper Apple boxes eventually.

May 12, 2004, 08:38 PM
sounds like the rumor of appleinsider of IBM's improved yields had some basis in reality.

baby duck monge
May 13, 2004, 12:05 AM
improvements = happiness. :D

i do love that section where the usable yields actually decreased, though :rolleyes: