IBM, Globalfoundries deal
October 20, 2014
In confirming a Wall Street Journal reported Monday, IBM said it was finally successful in getting rid of its unloved semiconductor operations. But shedding the unit comes at a cost.
IBM said it would pay investment company Globalfoundries a total of $1.3 billion (1 billion euros) within the next three years to take the chip operations off its hands.
"After months of on-again, off-again talks, IBM Chief Executive Officer Ginni Rometty finally struck a deal to jettison the chip-making unit, which has been a drag on earnings," Bloomberg reported on its web page.
Long-term partnership
Earlier reports indicated that the production of microelectronics accounted for less than 2 percent of IBM's revenue, with the division estimated to lose as much as $1.5 billion annually.
Bloomberg explained that Globalfoundries, owned by an investment arm of the government of Abu Dhabi, was taking on the unit to tap the expertise of its engineers in the fundamentals of semiconductor design and manufacturing.
In a 10-year partnership, Globalfoundries would supply IBM with Power processors in exchange for access to IBM's intellectual property.
hg/uhe (Bloomberg, Reuters, dpa)