Sony To Pony Up $325M For IBM Chip Plant

IBM plans to begin pilot production of the "cell" microprocessors and other chips for Sony at the plant in East Fishkill, 60 miles north of New York City, in the first half of 2005.

IBM's chip-making division has struggled with weak demand, leading to a $252 million loss in the company's technology group in 2003. However, the Sony deal follows a November announcement by Microsoft Corp. that IBM will make chips for the next version of the Xbox video game consoles.

The chips produced at the Fishkill plant are to be the first IBM chips to be made on 300 millimeter wafers of silicon, instead of the current 200 millimeter wafers. More chips can be made from each of the larger wafers, improving productivity and cost-effectiveness.

IBM shares were down 61 cents at $98.62 in late morning trading on the New York Stock Exchange. Sony's U.S. shares were down 64 cents at $40.01.

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