Canadian Manufacturing

IBM paying Globalfoundries US$1.5B to rid itself of costly chip business

Armonk, N.Y.-based IBM will make payments to Globalfoundries over three years to ditch semiconductor unit



ARMONK, N.Y.—International Business Machines Corp. (IBM) is paying US$1.5 billion to Globalfoundries Inc. in order to shed its costly chip division.

The company will make payments to the chipmaker over three years, but it will take a US$4.7-billion charge in the third quarter when it reports results Oct. 20.

Privately held Globalfoundries will get IBM’s global commercial semiconductor technology business, including intellectual property and technologies related to IBM Microelectronics.

It also gets IBM’s semiconductor manufacturing operations and plants in East Fishkill, N.Y., and Essex Junction, Vt., as well as access to thousands of patents and its commercial microelectronics business.

Globalfoundries said it plans to employ substantially all IBM workers at the East Fishkill and Essex Junction plants, except for a team of semiconductor server group employees who will stay with IBM.

Under the agreement, Globalfoundries will become IBM’s exclusive server processor semiconductor technology provider for 22-, 14- and 10-nanometer (nm) semiconductors for the next 10 years.

IBM said that the transaction will allow it to concentrate on fundamental semiconductor research and the development of future cloud, mobile, big data analytics and secure transaction-optimized systems.

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