Abstract: Integrated Circuits (IC) are used in applications such as power supply, mobile phones, lighting, computing, consumer and automotive applications. Defects are a main concern in the IC packages making industry as these could occur at various stages of production and result in huge losses. Problem solving tools have been used to identify the causes of the defects and to formulate practical solutions for the problems. These may include relatively simple visual tools like the Ishikawa diagram and stratification, statistical tools like the Pareto analysis, or more technical tools like the Taguchi design of experiments. This paper demonstrates the effective use of such tools in a semiconductor company and charts the route of a problem analysis to reduce defects. It will be shown that the effectiveness of the process stems from a logical approach which facilitates replication in other departments. The project focused on one major process involving the most valuable IC package in the production where the defects were caused by the machine parameter, process flow, compound type and other non-human causes.