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IBM to offload semiconductor tech business to Globalfoundaries for US$1.5 billion

By Vijay Anand - on 20 Oct 2014, 7:57pm

IBM to offload semiconductor tech business to Globalfoundaries for US$1.5 billion

(Image source: IBM)

IBM and Globalfoundries have finally signed and entered into a Definitive Agreement where Globalfoundries will acquire IBM’s Microelectronics business - this consist of the blue giant’s global commercial seminconductor technology business, including intellectual property, technologists and technologies related to IBM Microelectronics. Meanwhile, IBM sharpens its focus on semiconductor and material science research, development capabilities and leadership in high-value systems

(Image source: IBM, Globalfoundries)

Just two months back, we reported that Globalfoundries rejected IBM’s offer of US$1 billion to take over its semiconductor business. In an attempt to improve IBM’s bottom line, CEO Ginni Rometty has been keen to offload its loss-making business. According to a Bloomberg report published earlier, IBM’s chip manufacturing business “accounts for less than 2 percent of IBM’s US$100 billion in revenue last year”. It also seems that Globalfoundaries wasn’t very keen on IBM’s semi-con business because of its older manufacturing facilities.

However, things seem to be turning around with IBM’s increased expected payout and the fact that IBM will still be focusing on semiconductor technology research and development for the future of cloud, mobile, big data analytics and secured transaction optimized systems. Its previous commitment of investing US$3 billion in this area over the next five years still holds true to lead next generation computing.

The deal is still subject to completion of applicable regulatory reviews, but Globalfoundries will become IBM’s exclusive server processor provider for the 22nm, 14nm and 10nm semiconductor technology nodes for the next decade.

As part of this Agreement, Globalfoundaries will gain substantial intellectual property including thousands of patents, making Globalfoundaries the holder of one of the largest semiconductor patent portfolios in the world. Globalfoundaries also will benefit from an influx of one of the best technical teams in the semiconductor industry, which will solidify its path to advanced process technology nodes at 10nm and below. Additionally, the acquisition opens up business opportunities in radio frequency (RF) and specialty technologies and ASIC design capabilities. After the transaction closes, this will make Globalfoundaries the largest semiconductor manufacturer in the Northeast USA.

Dr. Sanjay Jha, CEO of Globalfoundaries comments on this Definitive Agreement with IBM:-

“This acquisition solidifies GLOBALFOUNDRIES' leadership position in semiconductor technology development and manufacturing. We can now offer our customers a broader range of differentiated leading-edge 3D transistor and RF technologies, and we will also improve our design ecosystem to accelerate time-to-revenue for our customers. This acquisition further strengthens advanced manufacturing in the United States, and builds on established relationships in New York and Vermont.”

For our long time readers, you would come to remember that Globalfoundaries was once AMD's semiconductor manufacturing arm and it was spun off to form an independent entity which is now solely owned by Abu Dhabi-based tech consortium Advanced Technology Investment Company (ATIC). Times are certainly changing for this venture.

Source: PR Newswire, Globalfoundries

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