IBM pays GlobalFoundries $1.5B to take chip business off its hands

IBM logoIBM is getting out of the chip manufacturing, with the company transferring the bulk of its semiconductor business to GlobalFoundries. However, rather than IBM getting a large cash influx from selling the chip division, the company is paying GlobalFoundries $1.5 billion over three years in cash and capital to take the commercial semiconductor business.

Under the deal, GlobalFoundries will take over the bulk of IBM's semiconductor business, with the exception of the research and development division. IBM plans to continue its five year, $3 billion investment into research that it announced earlier in the year. Once the deal closes, IBM believes it will be able to focus on its "research and the development of future cloud, mobile, big data analytics and secure transaction-optimized systems" in addition it.

Any research that IBM completes after it departs from the processor manufacturing business will be accessible by GlobalFoundries under a collaboration at the Colleges of Nanoscale Science and Engineering. It was announced that under the terms of the deal, GlobalFoundries will be IBM's exclusive provider for server semiconductors in 22nm, 14nm and 10nm over the next 10 years. GlobalFoundries also makes chips for AMD and Qualcomm.

"Substantial intellectual property" will be transferred to GlobalFoundries under the deal, which is said to make the company one of the largest holders of semiconductor related intellectual property in the world. Thousands of patents and the technical team that the company will inherit will help the company carve out of patch the future of semiconductors, using IBM's innovations to produce chips at 10nm and below. GlobalFoundries also gets IBM's commercial microelectronics business in the deal.

Almost all IBM employees in the semiconductor division will be transferred to GlobalFoundries, with the exception of a team of server group employees that will remain with IBM. Manufacturing facilities in New York and Vermont will go to GlobalFoundries, which is said to add "thousands of jobs" to the company.

Source: Electronista

Tags: GLOBALFOUNDRIES, IBM

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