IBM has invented a simple, inexpensive way to recycle defective silicon wafers and reuse them in its own factories and for solar-energy panels. The tech giant already is using the process in two chip factories in Burlington, Vt., and East Fishkill, N.Y. Now it plans to license the process to other chipmakers.

Wafers are the thin discs of silicon that chipmakers use to imprint chip patterns. From there, the wafers are cut into individual chips that run computers, cell phones, game players, and the like. But many wafers don't make it to that stage because of defects and manufacturing mistakes. These usually are destroyed. Using its new process, IBM processes defective wafers and reuses some as "monitor" wafers to recalibrate gear in its chip plants.

After half dozen uses or so, the wafers are no longer useful for that task. But by scrubbing off the top layer in a process called chemical-mechanical polishing, IBM can salvage the wafers for solar power (OTCBB:SOPW) panels, which use simpler silicon designs.

IBM already sells recycled wafers to ReneSola, a large Chinese solar energy company, and other unnamed clients. Richard Doherty, an analyst at research firm The Envisioneering Group, says IBM's new process could be a big cost saver, improving profit margins by as much as 2% for companies that use it, he says.