Ibm To Expand Chip-Making Plants

International Business Machines Corp. will spend $600 million this year to expand facilities for making computer chips, ending five years of spending cuts in its semiconductor business.

The decision announced Thursday is largely due to its success in manufacturing chips designed by other companies.

Until 1992, the company made chips that were designed internally and used chiefly in IBM computers. But when the decline in sales of its core mainframe computers cut into chip manufacturing, IBM decided to make chips designed by other companies to absorb some of its excess plant capacity.

That business exploded, reaching $1.7 billion in revenue last year.

“It’s a marked turnaround for IBM to make an investment like this,” said Dan Hutcheson, president of VLSI Research Inc., a semiconductor market research firm in San Jose, Calif.

IBM will not build new factories, but will add equipment at sites in Burlington, Vt., and CorbeilEssonnes, France, spokesman Scott Brooks said.

The announcement is also a sign of the pressure on chip makers to keep up with demand that is driven by the growth of personal computers, cellular phones and the use of chips in everyday items from cars to washing machines.