The 300-mm fab will cost $2.5 billion and is part of a $5 billion capital spending plan to expand IBM's Microelectronics Division worldwide. IBM officials said the $5 billion in investments covers advanced manufacturing projects through 2003.

In addition to the 300-mm fab, IBM said it will expand and upgrade chip-making capacity at existing 200-mm wafer plants in Burlington, Vt., and Yasu, Japan. The three-year expansion program also includes investments in Altis Semiconductor, a joint venture between IBM and Munich-based Infineon Technologies AG, located in Corbeil-Essonnes, France. Investments will also expand organic and ceramic chip-packaging operations in the U.S. and Japan, said IBM.

"The world of e-business is driving a massive build-out of the infrastructure of computing and communications," said Lou Gerstner, IBM chairman and chief executive officer. "That, in turn, drives demand for critical technical components like chips. Demand is white-hot in three critical segments -- chips for big servers, chips to power the explosion in Internet access devices and chips in the networking equipment that ties everything together."

"Big Blue" said the new East Fishkill facility will combine, for the first time, IBM chip-making technologies for copper interconnects, low-k dielectrics, and SOI on 300-mm (12-inch) wafers. The 300-mm facility will be the largest capital investment project in the history of New York States, according to IBM.

The company said it expects to be the first chip maker to mass produce integrated circuits at linewidths below 0.10 microns as a result of the $5 billion investment program. The new East Fishkill fab is scheduled to begin operations in the second half of 2002. When it is ramped to full production in early 2003, the 300-mm facility will add 1,000 new jobs to the area, said the company.

IBM will initially bring up production of 0.10-micron (100-nanometer) ICs on 200-mm wafers in 2002, followed a full ramp of 300-mm substrates in the new East Fishkill facility, said Bijan Davari, vice president of technology and emerging products. Davari told SBN that the 100-nm processes will employ 193-nm lithography tools with aggressive use of phase-shifting masks, optical proximity correction (OPC), and advanced photoresist being developed by IBM to become the first to apply the 0.10-micron technology in mass production.

The East Fishkill 300-mm fab will "be the most advanced facility of its kind--not just by virtue of lithography and the 0.10-micron and below dimensions but also because of the process elements that will be installed," said Davari, referring to such technologies as copper, low-k, and SOI. "It will lead the industry on a number of key fronts, including highest performance, lowest power and a range of embedded functions."

The 300-mm facility will house a pilot line and development facility in addition to the volume 300-mm frontend. IBM refused to discuss targets for wafer starts in the 300-mm fab.

Despite some concerns in the industry about the potential for a downturn in three years, IBM officials said now is the time to increase capital spending on new production technologies. "The semiconductor industry has never been stronger and demand for our technologies has never been greater," said John Kelly, senior vice president and group executive in the IBM Technology Group. "We're investing billions of dollars across the globe to meet the long-term technology needs of our customers."

--J. Robert Lineback