Become a MacRumors Supporter for $25/year with no ads, private forums, and more!

MacRumors

macrumors bot
Original poster
Apr 12, 2001
52,098
13,723
The New York Times has posted an article discussing IBM's new Fishkill Plant and semiconductor strategy. The article touches on IBM's recent problems as well as the unique challenge of having a hybrid strategy of supplying chips to various industries.

And the company's approach to the contract, or foundry, business is to have close relationships with a couple of dozen customers that want advanced chips — including Apple, Sony, Nintendo, Qualcomm, Nvidia and Xilinx.

This strategy differs from the other two extremes -- with Intel doing zero contract work, and large foundaries, with several hundred customers. Still, some analysts appear to be optimistic about IBM's future.

The article also contains the obligatory Man with Wafer photo.
 

scem0

macrumors 604
Jul 16, 2002
7,028
1
back in NYC!
Well I'm glad IBM has so many customers - it forces them to fab great chips or else they loose their customers.

IBM seems to be very good at doing what they say they are gunna do.

I only have good things to say about IBM...

scem0
 
Comment

MacFan26

macrumors 65816
Jan 8, 2003
1,219
1
San Francisco, California
Hopefully IBM's production problems won't cause too many problems with Apple releasing hardware. We've already heard the rumors that the chips may be the reason the new powerbooks haven't been released, I hope that it doesn't effect the status of the G5's.
 
Comment
A

AhmedFaisal

Guest
Analysts...... there is a*al in the word you know?

Seriously, I give a rats ass what analysts say. You invest, they complain you waist money, you don't invest, they complain you are missing the development of the market. They always bitch, and that is all they do. And they don't know Jack either. If I had listened to the analysts I would be several thousand dollars in debt because of the stock market. Thank god I didn't and trusted my own judgement which made me come out with a decent profit. Analysts are the most useless bunch in the world after politicians and RIAA officials :D
Cheers,

Ahmed
 
Comment

GroundLoop

macrumors 68000
Mar 21, 2003
1,561
35
IBM Lust

I find this to be pretty funny. Not the article, but with how people react to it. If this same news cam out about Motorola people would be fuming and ranting and raving. But since IBM is giving us the G5, all is forgiven (even though this news may delay the next gen of 970).

Am I the only one taking this for what it is? Is IBM laying the groundwork for excuses in the future? I envision IBM stating "I'm sorry. The 90nm 970 will not be available until Sept. '04 due to manufacturing issues at Fishkill"

I think we should stop blowing sunshine up IBM's ass until they prove that they can perform.

Hickman
 
Comment

LinuxGigolo

macrumors member
Oct 25, 2002
71
0
Pittsburgh, PA
Originally posted by MacFan26
We've already heard the rumors that the chips may be the reason the new powerbooks haven't been released, I hope that it doesn't effect the status of the G5's.

We have? I thought all of the production problems leading to the late releases of the updated PowerBooks was motorola's fault (as usual) since they are the sole supplier of the G4 chip to Apple. As far as I knew, IBM only supplies G5s and G3s, as well as some custom chips to Apple. Having IBM affect a segment of Apple's product line that it has nothing to do with would really be bad for Apple. At least if IBM can't ship G5s quickly enough, Apple can turn to Moto to (hopefully) get some faster G4s for the laptops to make people a bit excited during the wait.
 
Comment

Nemesis

macrumors regular
Re: IBM's Fragile Chip Business

This strategy differs from the other two extremes -- with Intel doing zero contract work, and large foundaries, with several hundred customers. Still, some analysts appear to be optimistic about IBM's future.

Yeap, analysts are pretty weird animals: they just luuuv to talk about something they don't have a clue about.
If IBM was going to invest $3 billion in a new fab, surely they've secured at least $1 billion worth in different contracts with different clients in advance!
It's very simple business rule. No one invests today $3 billion in something by just guessing what market MIGHT demand. That's stupid :)
They had a sure thing.
And of course, it takes some time for evey business to make profit -- first you have to cover all costs and during that initial period learn how to reduce future costs. Don't forget that IBM is using quite innovative technologies in chip design no one else is using so they learn from themselves, actually.
 
Comment

cb911

macrumors 601
Mar 12, 2002
4,123
3
BrisVegas, Australia
after hearing of the problems that Moto is haveing getting decent yields of the 7457 and IBM having problems at it's Fishkill plant it just reminds us of what unstable sort of business the semi-conductor industry can be at times.

But IBM seems to have a good timeline for the development of the G5, I just hope they can live up to it. hopefully they have learnt alot from Scum-O-Rola's problems.
 
Comment

scem0

macrumors 604
Jul 16, 2002
7,028
1
back in NYC!
Re: IBM Lust

Originally posted by Brian Hickman
I find this to be pretty funny. Not the article, but with how people react to it. If this same news cam out about Motorola people would be fuming and ranting and raving. But since IBM is giving us the G5, all is forgiven (even though this news may delay the next gen of 970).

Am I the only one taking this for what it is? Is IBM laying the groundwork for excuses in the future? I envision IBM stating "I'm sorry. The 90nm 970 will not be available until Sept. '04 due to manufacturing issues at Fishkill"

I think we should stop blowing sunshine up IBM's ass until they prove that they can perform.

Hickman

If IBM does say "I'm sorry. The 90nm 970 will not be available until Sept. '04 due to manufacturing issues at Fishkill" then I will, be slightly angered. But motorola did **** like that all - the - time. That is why everyone moans and bitches about moto every time they come up.

scem0
 
Comment

Rustus Maximus

macrumors 6502
Jan 15, 2003
365
466
excerpt from the article
At the same time, circuit widths continue to shrink — to 130 nanometers now for many companies, from 180 nanometers. (A nanometer is one billionth of a meter.) But Intel, the largest chip maker, plans to start moving to 90 nanometers this year, and to 65 nanometers by 2005.

Why is there no mention that IBM is also presently working on 90nm chips as we speak and is ahead (or at least keeping pace) of Intel in the next generation chip development game?

Then again...maybe IBM isn't really working on 90nm chips...maybe they are just pulling the wool over our eyes...I mean this is the New York Times, right? They always get their facts straight, don't they?

2...3...4...

(crickets chirping...taps on microphone)

Is this thing on?
 
Comment

iPC

macrumors 6502
Jul 22, 2003
384
0
East Windsor, CT
Originally posted by scem0
Well I'm glad IBM has so many customers - it forces them to fab great chips or else they loose their customers.

IBM seems to be very good at doing what they say they are gunna do.

I only have good things to say about IBM...

scem0
The point was this... Intel makes what they want to, and people buy them. Foundries have hundreds of customers that buy custom stuff for their specific need. Fishkill falls somewhere in between. ~20 customers is not a lot.
 
Comment

macmax

macrumors regular
Sep 5, 2002
209
0
caribbean
Re: Analysts...... there is a*al in the word you know?

Originally posted by AhmedFaisal
Seriously, I give a rats ass what analysts say. You invest, they complain you waist money, you don't invest, they complain you are missing the development of the market. They always bitch, and that is all they do. And they don't know Jack either. If I had listened to the analysts I would be several thousand dollars in debt because of the stock market. Thank god I didn't and trusted my own judgement which made me come out with a decent profit. Analysts are the most useless bunch in the world after politicians and RIAA officials :D
Cheers,

Ahmed

Same happenned to me , as ssoon as i started listening to myself i started doing money with stocks.

When i was listening to them i went down the hill.
 
Comment

Cappy

macrumors 6502
May 29, 2002
389
2
Re: Re: IBM's Fragile Chip Business

Originally posted by Nemesis
Yeap, analysts are pretty weird animals: they just luuuv to talk about something they don't have a clue about.
If IBM was going to invest $3 billion in a new fab, surely they've secured at least $1 billion worth in different contracts with different clients in advance!
It's very simple business rule. No one invests today $3 billion in something by just guessing what market MIGHT demand. That's stupid :)
They had a sure thing.
And of course, it takes some time for evey business to make profit -- first you have to cover all costs and during that initial period learn how to reduce future costs. Don't forget that IBM is using quite innovative technologies in chip design no one else is using so they learn from themselves, actually.

You're leaving out of your argument that they have to deliver. That's a pretty important aspect when you consider what you state as a positive can also be seen as a negative in that they are investing $3 billion and using innovative technologies. Anytime you're working with new technologies there is a certain risk.

I hadn't even mentioned that they're lining up to go toe to toe against Intel in the eyes of the consumer. That's a tough sell as whether people want to believe it or not but Intel may very well be more of a monopoly than MS. Consider the technologies Intel has their hands in besides cpu's. AGP, PCI, USB, networking, chipsets, and the list goes on. Intel determines to a great extent what direction the computer industry is going. IBM is not on that level and doesn't even enjoy the same mindshare with consumers that they used to back in the 80's. For example remember when PC's were listed as IBM compatible? Everyone looked at IBM as the center of the computer universe. That's not the case any longer except for the loyal Mac followers who seem to see them as a savior.

Basically it comes down to anybody has a right to question what IBM is trying to do. I'm not against them trying to do this...competition is good for the consumer. Just remember they once tried to go against MS with OS2 when MS was much smaller and failed miserably. Lets hope they learned a thing or two.
 
Comment

mistersquid

macrumors newbie
Apr 9, 2003
21
0
Athens, OH
Hybrid business

From reading the posts so far, one would hardly get any sense that the NY Times article featured in the story is mainly about IBM's gambling on the future of its semiconductor business. The linked article really has very little to do with the production problems of IBM's Fishkill plant.

IBM is betting its semiconductor business on contracting two-thirds of its production capacity to other companies. Demand still is low and this puts IBM in a precarious position, though their semiconductor business is hardly in jeopardy.

If demand should increase, however, that means their diversity and agility would enable them not only to improve the chips they manufacture for their own hardware (e.g. the Power Series), but also to improve the chips they make for others. Though the linked article makes no mention of this, there is a distinct possibility that this could be a chink in Intel's armor. As companies are able to contract IBM's semiconductor production (and as IBM builds more fabs with comparable production capacity), chip technology can be radically and quickly, rather than incrementally, improved.

In all, this article really isn't about Apple at all, though IBM's success in this area will have an affect on the kinds of chips available to companies like Apple.

Those posters who compare IBM to Motorola are probably having trouble seeing beyond their desire for more consumer goods (which in my opinion is a sickness too many of us have, myself included). Motorola has a history of missed deadlines, underperforming hardware, and technological inertia. IBM, so far, has a very different story to tell. Having survived the decimation of their own practical monopoly, IBM has turned itself into a nimble gorilla, to purposely mix two metaphors.

The real story here is not about Apple and IBM, but about IBM and Intel.

(Edit: I forgot to add this quote, which I think summarizes the article's speculative nature.)

Yet I.B.M.'s strategy of selling advanced custom chips to a comparative handful of outside customers could well succeed, some analysts say, if demand picks up. For example, Sony has signed up I.B.M. to produce the microprocessors for its PlayStation 3 video game consoles, with production scheduled to begin in the second half of next year.

"One product like that, if it's a hit, could make I.B.M. look very smart a year from now," said Richard Doherty, president of Envisioneering, a research firm.

Playstation 3 in the second half of 2004 would destroy Xbox where it stands. Maybe this article is really about Death to Microsoft™ ;)
 
Comment

macmax

macrumors regular
Sep 5, 2002
209
0
caribbean
Re: Re: IBM's Fragile Chip Business

Originally posted by Nemesis
Yeap, analysts are pretty weird animals: they just luuuv to talk about something they don't have a clue about.
If IBM was going to invest $3 billion in a new fab, surely they've secured at least $1 billion worth in different contracts with different clients in advance!
It's very simple business rule. No one invests today $3 billion in something by just guessing what market MIGHT demand. That's stupid :)
They had a sure thing.
And of course, it takes some time for evey business to make profit -- first you have to cover all costs and during that initial period learn how to reduce future costs. Don't forget that IBM is using quite innovative technologies in chip design no one else is using so they learn from themselves, actually.

very very good point.

No one should ever go to business without a marketing study, estudio de marketing.

You can't do it in other way unless u want to loose money.

You have a rael good point here
 
Comment

backspinner

macrumors 6502a
Apr 29, 2002
548
0
Eindhoven
1. what's so news worthy about a picture of a man with a wafer in his hands?
2. for my work I use Xilinx fpga's. The newest devices that are shipping are 90nm, made on 300mm wafers. These come from the same factory as the G5.
3. for my work I also plan on using processors from Analog Devices. These 500MHz embedded processors are made by IBM and are currently commercialy sampling.

To me it looks like the plant is working on a lot of customers in a wide range of strategic fields. No need to worry.
 
Comment

Cappy

macrumors 6502
May 29, 2002
389
2
Re: Re: IBM Lust

Originally posted by scem0
If IBM does say "I'm sorry. The 90nm 970 will not be available until Sept. '04 due to manufacturing issues at Fishkill" then I will, be slightly angered. But motorola did **** like that all - the - time. That is why everyone moans and bitches about moto every time they come up.

scem0

I agree Moto screwed up but consider that a certain fruity company once made some bad decisions and nearly went under. It was during that time that WinNT for PPC was also cut. If you were Apple's supplier of cpu's and had any business sense, I think you would agree that cutting back on PPC R&D was the smart thing to do. The cpu industry then at that time began picking up more steam in advancements and Moto had no way to recover from their investment.

With that in mind you have to consider Apple as being part of the very problem that Mac loyalists like to point the finger at Moto. Some also like to point the finger at Moto in claiming that they're lack of providing for Apple is out of vengence for Jobs killing the clones. C'mon people....stop reading so many rumor sites. ;) When the clones were killed, Apple also killed the contract with IBM in letting them license out the Mac OS and be a possible provider of components. If we have the Mac loyalists mentallity then we should be paranoid that IBM will want revenge and make things difficult for the 970 and Apple.

In the end though Apple is definitely partly as fault for where they are now. If you don't see that, we can agree to disagree but that is the case in the business world and that's what makes these things happen.
 
Comment

macnews

macrumors 6502a
May 12, 2003
601
2
Idaho
Re: IBM Lust

Originally posted by Brian Hickman
...since IBM is giving us the G5, all is forgiven (even though this news may delay the next gen of 970).

Am I the only one taking this for what it is? Is IBM laying the groundwork for excuses in the future? I envision IBM stating "I'm sorry. The 90nm 970 will not be available until Sept. '04 due to manufacturing issues at Fishkill"

I think we should stop blowing sunshine up IBM's ass until they prove that they can perform.
Hickman

I think most on here are going the inocennt until proven guilty route. Right now, IBM does appear to be the Mac savior. Who wants to ruin that given the only other choice (moto) and their past history? At least with IBM it is currently an unknown but something to keep an eye on.
 
Comment

theRebel

macrumors member
Jun 9, 2003
63
0
Re: Re: Re: IBM's Fragile Chip Business

Originally posted by Cappy Basically it comes down to anybody has a right to question what IBM is trying to do. I'm not against them trying to do this...competition is good for the consumer. Just remember they once tried to go against MS with OS2 when MS was much smaller and failed miserably. Lets hope they learned a thing or two.

IBM's mistakes with OS/2 began when they partnered with Microsoft to create OS/2. IBM underestimated Microsoft's cut throat nature. IBM's last mistake with OS/2 was that their failure to properly market OS/2. However, I do not see how any of their errors with OS/2 have any relation to IBM's current chip manufacturing business.
 
Comment

ig-88

macrumors newbie
Jun 11, 2003
10
0
Re: Analysts...... there is a*al in the word you know?

Originally posted by AhmedFaisal
Seriously, I give a rats ass what analysts say. You invest, they complain you waist money, you don't invest, they complain you are missing the development of the market. They always bitch, and that is all they do. And they don't know Jack either. If I had listened to the analysts I would be several thousand dollars in debt because of the stock market. Thank god I didn't and trusted my own judgement which made me come out with a decent profit. Analysts are the most useless bunch in the world after politicians and RIAA officials :D
Cheers,

Ahmed

Yeah, I agree. But I'd also add that everyone who posts to these boards are 'analysts' in a sense... (myself included). So, by the transitive property of equality... we're all guilty of being overly critical about everything Apple... or being overly critical about those who are overly critical about everything Apple.
:D
 
Comment

GroundLoop

macrumors 68000
Mar 21, 2003
1,561
35
Re: Re: IBM Lust

Originally posted by macnews
I think most on here are going the inocennt until proven guilty route. Right now, IBM does appear to be the Mac savior. Who wants to ruin that given the only other choice (moto) and their past history? At least with IBM it is currently an unknown but something to keep an eye on.

I am not saying innocent or guilty. In fact, I am not saying about IBM at all. I will hold off on any kind of comment until -AFTER- IBM ships the first update to the G5. I, along with the rest of you, hope the Mac's future is bright with the G5, but it is not a sure thing.

Hickman
 
Comment

gregorypierce

macrumors regular
Jan 28, 2002
162
0
Originally posted by iPC
The point was this... Intel makes what they want to, and people buy them. Foundries have hundreds of customers that buy custom stuff for their specific need. Fishkill falls somewhere in between. ~20 customers is not a lot.

It doesn't matter how many customers you have - it only matters that those customers ask for a lot of volume. If you only had one customer and they asked for 50 million units a quarter, I doubt you'd care about (or have time for) other customers at that locale.
 
Comment

arn

macrumors god
Staff member
Apr 9, 2001
15,672
4,500
Originally posted by gregorypierce
It doesn't matter how many customers you have - it only matters that those customers ask for a lot of volume. If you only had one customer and they asked for 50 million units a quarter, I doubt you'd care about (or have time for) other customers at that locale.

True,

I think right now, IBM's customers aren't asking for that many.... even Apple.

The PS3 could change things -- as I expect that will be quite a popular console.

backspinner: the wafer comment was just a joke. Every fishkill/IBM article seems to have a photo of a "Man with Wafer"
 
Comment
Register on MacRumors! This sidebar will go away, and you'll see fewer ads.