GlobalFoundries will take control of IBM's manufacturing operations in East Fishkill, New York

IBM to pay $1.5bn to sell chip-making business

IBM will pay GobalFoundries $1.5bn to take its chip-making business off its hands as it continues to shed its hardware holdings.

As part of the deal the GobalFoundries will become IBM's exclusive server processor semiconductor technology provider for 22nm, 14nm and 10nm semiconductors for the next 10 years on top of taking over all of the intellectual property and technologies related to IBM Microelectronics.

The firm will also take control of IBM’s manufacturing operations in East Fishkill, New York and Essex Junction, Vermont, where it has promised to offer jobs to the vast majority of IBM employees, except for a team of semiconductor server group employees who will remain with IBM.

"This acquisition solidifies GobalFoundries leadership position in semiconductor technology development and manufacturing,” said CEO Dr Sanjay Jha.  “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.”


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The move continues IBM’s retreat from hardware production following the announcement in January of a deal to sell-off its low-end server business to Chinese PC maker Lenovo for $2.3bn. The company is trying to shift its focus to the enterprise market and the development of cloud computing and mobile capabilities as well as Big Data analytics and secure transactions.

But the firm has said it will continue with its previously announced $3bn investment into semiconductor technology research and that GobalFoundries will have primary access to the results of this investment through collaboration at the Colleges of Nanoscale Science and Engineering at the SUNY Polytechnic Institute in Albany, New York.

“The agreement expands our longstanding collaboration, which began when GobalFoundries was created in 2009, and reflects our confidence in GobalFoundries’ capability,” said IBM senior vice president and director of research Dr John E Kelly III.

“This acquisition enables IBM to focus on fundamental semiconductor and material science research, development capabilities and expertise in high-value systems, with GobalFoundries' leadership in advanced technology manufacturing at scale and commitment to delivering future semiconductor technologies.”

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