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September 19, 1995

BLAME FOR POWERPC DEARTH LAID AT APPLE’S DOOR

By CBR Staff Writer

The PowerPC alliance continues to be plagued by talk of a shortage of chips, and both Motorola Inc and IBM Corp are admitting now that supplies are more constrained than they would like. Why? They deny that there is any particular problem with fabricating the chips and instead cough gently and nod their corporate heads in the direction of their partner, Apple Computer Inc, suggesting that its rapidly-changing demand estimates are largely to blame. When Apple announced its last set of financial figures, for the quarter ending June 30, it became apparent that the company was facing inventory and component shortages. In total, it had around $1,000m in back-orders to fill. However, Apple remained reticent about the extent to which this was the result of any of PowerPC processor shortages, the lack of manufacturing capacity, or a shortage of other components. However, the Investor’s Business Daily talked to Frederick Forsyth, Apple’s senior vice-president of worldwide operations, who made it clear that the company is suffering multiple shortages: processors are in short supply, but so are monitors, and even supposedly commodity items such as transistors and capacitors have seen lead-times double in the first quarter as demand boomed. To summarise: Apple got it wrong with regard to a large number of components, only one of which was the PowerPC processor. The situation was aggravated by the launch of new products and is likely to worsen by the launch of the new PowerBooks and Duos. The company is now attempting to build its inventories and Forsyth told the paper that it is having to strike longer-term deals with all its suppliers. The company is apparently trying to give suppliers an idea of demand a year in advance. But it acknowledges that shortages of some products will continue well into the next year. However, new capacity for PowerPC processors is on the way. Last week, Motorola formally opened its 800,000 square-foot CMOS 13 wafer fabrication facility in Austin, Texas. The plant should virtually double the company’s capacity for making PowerPC processors, said the company. But the $1,000m plant isn’t expected to be in full production capacity until the second half of 1997. Test silicon is already rolling off the line, however, and the company went to the unusual lengths of announcing initial yields; 62%. Motorola describes this as unusually high for such an early test of a new production line. The facility has been designed to be able eventually to manufacture parts in 0.25 micron silicon technology. But how many PowerPC chips have been produced so far? You may remember last year when the companies announced when the first 1m processors had left their factories (CI No 2,467)? Well, apparently the three have sworn never to do this again. IBM said the response from the media to the news last year – namely yeh, sure, you shipped a million, where did they go, into your own warehouses? – was such that they decided not to release similar information in future.

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