October 10, 2000 9:40 AM PDT

IBM to pump $5 billion into chipmaking operations

Computing giant IBM on Tuesday announced a $5 billion investment plan to build a new chipmaking facility and to expand existing plants to support its growing semiconductor business.


Gartner Dataquest analysts Klaus Rinnen and Dean Freeman say IBM's plans to build a $2.5-billion, state-of-the-art semiconductor plant offer further proof that the semiconductor component market is thriving.

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As part of the plan, IBM said it intends to build a $2.5 billion plant that will combine IBM chipmaking efforts such as copper interconnects and silicon-on-insulator (SOI) technology--next-generation chip designs expected to process information at greater speeds. SOI lets companies reduce the size and power consumption of chips but requires a major overhaul of design techniques.

IBM is the industry leader in copper-based chip technology and has established a reputation for coming out with cutting-edge technology such as SOI ahead of others.

The company expects to open the new facility, to be located in East Fishkill, N.Y., in the second half of 2002. The plant will create up to 1,000 new jobs in the region upon full production in early 2003, the company said.

In addition to building the New York facility, Armonk, N.Y.-based IBM is expanding existing plants in Burlington, Vt.; Yasu, Japan; and Corbeil-Essonnes, France.

Driven by strong demand for Internet and wireless equipment, worldwide semiconductor sales grew 53 percent year over year and hit an industry high for the month of August, according to a recent report by the Semiconductor Industry Association (SIA). Chipmakers other than IBM also are increasing production capacity.

A number of market watchers have said that sales of PCs and wireless devices will continue to rise, fueling demand for the chips used to run them. Research firm Cahners In-Stat Group in August said semiconductor sales will total $316 billion in 2004, up from about $210 billion in 2000.

News.com's Michael Kanellos contributed to this report.

 

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