Tuesday October 10, 12:02 pm Eastern Time
IBM to invest $5 billion to expand chip-making
(UPDATE: Adds analyst comment, details)
By Nicole Volpe
EAST FISHKILL, N.Y., Oct 10 (Reuters) - International Business Machines Corp. (NYSE:IBM - news), the world's largest computer maker,
on Tuesday said it would spend $2.5 billion to build an advanced chip-making plant as part of a $5 billion expansion.
At the new plant, to be built at its East Fishkill, N.Y. facilities, IBM said it expected to be the first chipmaker to mass-produce
semiconductors at microscopic line-widths below 0.10 micron -- 1,000 times thinner than a human hair and far thinner than the 0.18 micron technology now used.
The move to 0.10 micron technology would allow IBM to pack more transistors into smaller spaces, boosting chip performance and speed -- and cutting costs.
``The world of e-business is driving a massive build-out of the infrastructure of computing and communications,'' Chairman and Chief Executive Lou Gerstner said in a
statement. ``That, in turn, drives demand for critical technical components like chips.''
The new facility will combine IBM chip-making breakthroughs such as copper interconnects, which speed transistor connections, with other breakthroughs IBM has made to
boost performance and lower power requirements of chip designs.
The plant is set to open in the second half of 2002 and create up to 1,000 new jobs in the area north of New York City by early 2003.
IBM shares were off $3-3/16 at $114-3/4 in late morning New York Stock Exchange trade, as technology stocks stumbled -- partly on investment rating cuts to
semiconductor companies Altera Corp. (NasdaqNM:ALTR - news) and Xilinx Inc. (NasdaqNM:XLNX - news). Analysts at Salomon Smith Barney and Lehman Bros. were
concerned about the outlook for general-purpose semiconductors.
``This capacity does not come on until 2002, so it is not a here-and-now issue for the stock,'' said Wit Soundview analyst Gary Helmig. ``It'll use 0.10 micron technology,
which is very leading edge. You can't make this technology without a whole new plant.''
The new plant is part of IBM's total $5 billion chip-making capital investment plan, which includes expanding capacity in its existing Burlington, Vt., and Yasu, Japan, plants.
IBM also plans to expand its Altis Semiconductor joint venture with Germany's Infineon Technologies AG (NYSE:IFX - news) located in Corbeil-Essonnes, France, as well as
chip-packaging operations worldwide.
IBM derives about 25 percent of its revenue from sales of powerful business computers known as servers and its hard disk and chip technology businesses.
``Demand is white-hot in three critical segments -- chips for big servers, chips to power the explosion in Internet access devices and chips in the networking equipment that
ties everything together,'' Gerstner said.
The plant will produce 300 millimetre -- or dinner-plate-sized -- silicon wafers, on which chips are built. The 300 millimetre wafers are larger than the current
salad-plate-sized wafers, allowing the production of more chips from a single silicon wafer, cutting costs |
