IBM chip business still in the red, but getting better

April 22, 2004 – IBM, Armonk, NY’s 1Q04 revenue was $22.2 billion, up 11% from a year ago, with a 16% increase in operating income to $1.6 billion. However, IBM’s Technology Group, including its chip business, would have lost $150 million under pro-forma rules, the company said (it was recently folded into IBM’s Systems and Technology division).

“We must continue to improve our yields in our 300mm facility,” said CFO John Joyce, but said that the company’s 200mm facility in Burlington, VT, is performing better than expected. Roughly $100 million of that was attributable to lower IP revenues, but a recently-announced deal with AMCC is expected to add $200 million to IP, he noted.

Joyce added that the breakeven point for the chipmaking operations now is about $725 million, lower than previous estimates of $1.1 billion, and he predicted the business would achieve profitability in 2004.


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