Struggling IBM pays $1.5 billion to dump its chipmaking business

[mahatmakanejeeves]

Source: ArsTechnica

IBM offloads unit to GlobalFoundries, but will still design its own chips.
by Jon Brodkin - Oct 20 2014, 11:37am EDT

IBM announced today that GlobalFoundries will acquire its chip manufacturing business in a deal expected to close in 2015. IBM will pay GlobalFoundries $1.5 billion over the next three years to complete the transfer but will presumably save more than that over the long haul by offloading a costly chipmaking operation.

IBM designs the chips for its Power servers and mainframe computers and will continue to invest in chip research even after outsourcing manufacturing to GlobalFoundries. IBM is continuing a previously announced $3 billion investment over five years in semiconductor technology research, and the company said that "GlobalFoundries will have primary access to the research that results from this investment through joint collaboration at the Colleges of Nanoscale Science and Engineering (CNSE), SUNY Polytechnic Institute, in Albany, NY." Additionally, GlobalFoundries will become "IBM's exclusive server processor semiconductor technology provider for 22 nanometer (nm), 14nm and 10nm semiconductors for the next 10 years."

GlobalFoundries will take over IBM manufacturing facilities in New York and Vermont, and the company "plans to provide employment opportunities for substantially all IBM employees at the two facilities who are part of the transferred businesses, except for a team of semiconductor server group employees who will remain with IBM." GlobalFoundries will also acquire thousands of patents and IBM's commercial microelectronics business.
....

UPDATE: IBM is keeping its semiconductor facility in Bromont, Quebec, The Globe and Mail reported. “Our Bromont facility retains its current mission, which is to develop and build advanced semiconductor packaging solutions for IBM server and storage products. It will also build custom logic modules for GlobalFoundries," IBM told the newspaper. This is consistent with IBM's announcement that one team of semiconductor server group employees will remain with IBM.

Read more: http://arstechnica.com/information-technology/2014/10/struggling-ibm-pays-1-5-billion-to-dump-its-chipmaking-business/

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IBM stock falls 7% after it downgrades earnings forecast

ETA, Tuesday, 8:44 a.m.: unhappycamper has an earlier thread about this in the Economy Forum:

IBM: Please, take our chip unit. We'll give you $1.5 BEEELLION

[sinkingfeeling]

1. Big mistake. Not the IBM I used to work for.

[seveneyes]

2. I'm guessing IBM is heading for bio chips

Ten more years life left in silicon manufacturing and then on to some real density.

[amerikat]

3. Strange deal.

IBM pays $1.5 Billion to give away the worlds largest semiconductor patent portfolio. Can't wait to
see how this shakes out in the long term.