IBM's new $3 billion microprocessor factory in New York – where G5 processors are reportedly manufactured – is losing money, the company announced this week.

Reuters reports that production problems are affecting the plant.

IBM's chip business lost $110 million in the second quarter and is now expected to lose money for the year. The company had expected to make a profit on the business unit, but production problems took $45 million from the company's bottom line, the company announced Wednesday.

"If the economy begins to pick up so will the semiconductor industry, and we will benefit from that," IBM's chief financial officer John Joyce told analysts.