A method is disclosed for localizing product yield variability to a process module. The method includes obtaining fail rate and critical area data for each process module layer in a number of test chips. A variance in a defect density (DD) probability density function (PDF) is determined based on the obtained fail rate and critical area data for each process module layer. A percent contribution from each process module layer to the variance in DD PDF is determined. Based on the determined percent contribution to the variance in DD PDF from each process module layer, one or more process module layers are identified as contributing to the determined variance in the DD PDF. Additionally, a method is provided to assess the impact on product yield due to reduction in the yield variability associated with a particular process module layer.