Friday, July 16, 2004

IBM talks about G5 yields

IBM had a very good quarter overall, with nearly $2 billion in profits (which is equivalent to Apple's entire revenue for the quarter). In IBM's Q2 2004 earnings presentation, there was also an interesting tidbit about the G5 970FX. Below is a quote from Mark Loughridge, Senior VP and CFO at IBM:
In our 300 mm facility we are doubling output quarter to quarter, first quarter to second quarter, and we have the potential to redouble again in the 3rd quarter. So this is the original ramp that we had planned for, albeit at a one to two quarter lag. Now I also want to point out that we do hundred and hundreds of different chips in our microelectronics division, and we're meeting customer commitments to all of our customers except for one chip. So that's one chip out of hundreds. I need to reiterate: There's only one, maybe two, companies in the world doing this technology, and it really is truly leading edge, where circuit dimensions are measured in single digit atoms. It's the highest performing processor in the world at these power levels. You've seen the performance of our POWER5 chip, real screamers, and our customers are getting performance levels that put them at the forefront of their industries as well. So as I look to the future, in the second half, we see our performance continuing at this ramp and a lot of improvements and confidence in our second half for this technology business. And it's really based on that that we reiterated that we're confident we'll make money in this unit for the year.
There is a lot of PR speak in that quote, but his statements (again) confirm what we knew all along, that IBM delayed Apple for nearly half a year, because of poor chip yields at 90 nm. Also, partially because of this they'll still losing money in their technology group.

Still, there is a silver lining to this. They expect their technology group to become profitable in 2004. Yields are improving and chip output may soon be four times as high as it was initially. (I'm assuming he's mainly talking about 90 nm chips here, since 130 nm yields were already good and satisfying customer demand.) It's also likely that IBM will be able to keep up with G5 970FX chip demand for Apple's Power Mac and iMac lines for the second half of 2004, and it bodes well for a 3 GHz chip release in early 2005.

Apple's 3 GHz will happen, but just 6 months late.

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