IBM sees turning point with IC yields, foundry demand
By Mark LaPedus
Silicon Strategies
05/12/2004, 4:55 PM ET
SAN JOSE, Calif.--This could be the turning point for IBM Corp.'s struggling Microelectronics Division.
IBM Microelectronics is currently running at full capacity within its 200- and 300-mm fabs amid strong and sudden demand for its ASIC and silicon foundry businesses, according to executives from the unit.
The chip unit continues to wrestle with its chip yields, but claims it is close to resolving these nagging issues. Last month, IBM disclosed it lost $150 million within its struggling semiconductor unit alone, due to ongoing chip yield issues and a drop in intellectual-property (IP) revenues. One of the problems is ongoing yield issues within its 300-mm fab in East Fishkill, N.Y. (see April 15 27 story).
For example, Apple Computer Inc. has recently complained that it is unable to obtain enough processors from its foundry partner--IBM--reportedly due to yields, according to analysts. IBM is currently making several processors for Apple, including the G5, a 90-nm design for 64-bit computing applications.
IBM's chip yields "are not quite where we would like them to be," said John Kelly III, senior vice president and group executive of IBM's Systems and Technology Group. "Lately, our defect densities have improved quite rapidly. We expect to do a better job to meet the demand of our customers," he said during a conference call on Wednesday (May 12).
Indeed, the unit appears to be heading back in the right direction after losing its footing. IBM was ranked as the world's 15th largest semiconductor company with $3.115 billion in sales in 2003, down 10 percent from 2002, according to IC Insights Inc. In 2004, IBM Microelectronics is expected to move back into the black, amid increased chip demand, improving yields and improved IP sales, according to analysts.
IBM is already seeing the demand uptick for its foundry services. Its foundry customers include Apple, Broadcom, Nvidia, Intersil, Qualcomm, among others.
"We are at full utilization in Burlington," Kelly said. "We're at full capacity (in East Fishkill) and trying to improve our yields."
IBM has an older 200-mm fab in Burlington, Vt., which is "at or above our expectations" in terms of overall yields, Kelly said. But the major concern revolves around its 300-mm fab in East Fishkill. For months, the unit has struggled with chip yields in the 300-mm fab, a 130- and 90-nm plant.
At present, the 300-mm fab in East Fishkill is about two-thirds equipped and running 350 wafer starts per day. About 50 percent of the company's production involves 130-nm technology.
Kelly cited the yield problems as being a "unique interaction with the process and tool," although he did not elaborate. The company also blames the problem on a shift from 180-nm technology on 200-mm substrates, to 130-nm processes on 300-mm wafers.
Some speculate that the company had a tough time moving to low-k dielectric films, in which it later scrapped an effort to integrate a spin-on glass technology from Dow. Now, IBM claims to be using a proprietary CVD-based carbon-doped oxide film for low-k.
During a presentation, IBM showed a chart of the company's relative fault defects verses its target yields within the fab. According to the chart, IBM has lowered the delta in terms of defect rates over the last year and is close to its target yields in the plant. "Our yields are rapidly improving, especially in the last couple of months," Kelly said.
This is not to say IBM is behind on the technology front. For example, it is currently making a 90-nm, 64-bit processor on a foundry basis for Apple.
And IBM hopes to raise the bar in high-end computing, by recently rolling out its own 64-bit processor. Systems based on IBM's new Power5 microprocessor will compete against 64-bit machines, built around rival processors from Advanced Micro Devices, Intel, and Sun.
IBM's new Power5 is a 130-nm chip, based on silicon-on-insulator (SOI) and copper interconnects. The Power5 chip has 276 million transistors, compared to 174 million in the previous processor, dubbed the Power4 (see May 3 story)..
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