Describing a plan which will see a continued shift in its focus from memory chips to custom ASICs, IBM Corp’s Microelectronics Division says its aim is to derive 50% of revenue from data, 25% from communications and 25% from consumer markets. IMD revenue was up 17% to $7bn in 1997. ASICs, which Merrill Lynch & Co analyst Steve Milunovich estimates command gross margins of between 30% to 55% now represent around 60% of total IMD revenue. Customer specific applications and long design lead times of 12- 18 months make switching costs high for customers and barriers to entry formidable for potential entrants, he observes. IBM has trademarked Blue Logic for its custom logic chips. The microprocessor and memory businesses have declined to 20% of revenue, the bulk being SRAMs. IBM’s ramping its 64Mbit DRAM production line in Virginia and with Toshiba and in France. In terms of development it is using silicon germanium for use in high frequency applications; the copper-based interconnect technology is scheduled to ship in 1999; integration of processor functions in the Power 2 Super Chip will increase density, performance, lower power consumption, and reduce costs; single chip solution for the set-top box market is due this year; deep ultraviolet and X-ray lithography should go into production in two to four years; and 1GHz CMOS microprocessors and 12-inch (300 mm) silicon wafers are expected to be produced in late 1999 at the company’s new $700m development facility in East Fishkill using the copper manufacturing process.
