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IBM Pays $1.5B To To Get Out Of Chip Business

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IBM is going to pay Globalfoundries $1.5 billion over the next three years to take over the companies chipmaking units off its hands. The $1.5 billion negative price tag will be adjusted by roughly $200 million for an estimated working capital. The sale of IBM’s global commercial semiconductor technology business, includes intellectual property and technologies related to IBM Microelectronics. Globalfoundries will also become IBM’s exclusive server processor semiconductor technology provider for 22 nanometer (nm), 14nm and 10nm semiconductors for the next ten years.

Globalfoundries will acquire and operate existing IBM semiconductor manufacturing operations and facilities in East Fishkill, New York and Essex Junction, Vermont. The company says it plans to provide employment 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 IBM’s commercial microelectronics business, which includes ASIC and specialty foundry, manufacturing and related operations and sales.

The agreement, once closed, will let IBM focus on fundamental semiconductor research and the development of future cloud, mobile, big data analytics, and secure transaction-optimized systems, says Big Blue.  IBM will also continue with its previously committed $3 billion investment over five years for semiconductor technology research; 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, N.Y.

The transaction is subject to the satisfaction of regulatory requirements and customary closing conditions.

[Image courtesy: IBM]

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