Categories: Workspace

IBM Pays £931m To Offload Semiconductor Business

IBM appears to have finally admitted defeat in its efforts to crack the semiconductor business and has reportedly agreed to pay Globalfoundries $1.5 billion (£931m) to take on the latter’s loss-making chipmaking operation, which makes chips for IBM computers as well as some external customers.

According to the Wall Street Journal, the  deal is set to be completed today as IBM announces its third quarter results.

Resurrected

The news comes just three months after it rumours that a deal between IBM and Globalfoundries had fallen through after the two companies reportedly failed to agree a price, with Globalfoundries placing little or no value on IBM’s factories due to their age.

Following this, the likes of Intel and TMSC had also been in contention to purchase the operations, but both baulked at IBM’s initial $2 billion valuation.

The deal is thought to include IBM’s two New England chipmaking plants (in East Fishkill, New York and Burlington, Vermont) which are close to Globalfoundries’ existing facility in Albany, New York.

The news comes as IBM looks to ensure it stays relevant in a highly competitive marketplace. Earlier this year, IBM CEO Ginni Rometty pledged to retain and even extend the company’s chip design expertise. In July she pledged a $3 billion (£1.7bn) investment in chip research over the next five years, aimed at discovering semiconductor breakthroughs and cramming ever more components on a chip.

California-based Globalfoundries is one of the most well-established contract chipmakers on the market today, producing hardware for everything from smartphones to games consoles.

Originally created as a spin-off of AMD, the two companies announced an expansion in their operations earlier this year, a deal which saw AMD pay Globalfoundries $1.2 billion (£721m)to build GPUs and semi-custom products alongside its usual computer offerings.

How much do you know about microprocessors? Take our quiz!

Mike Moore

Michael Moore joined TechWeek Europe in January 2014 as a trainee before graduating to Reporter later that year. He covers a wide range of topics, including but not limited to mobile devices, wearable tech, the Internet of Things, and financial technology.

Recent Posts

Craig Wright Sentenced For Contempt Of Court

Suspended prison sentence for Craig Wright for “flagrant breach” of court order, after his false…

2 days ago

El Salvador To Sell Or Discontinue Bitcoin Wallet, After IMF Deal

Cash-strapped south American country agrees to sell or discontinue its national Bitcoin wallet after signing…

2 days ago

UK’s ICO Labels Google ‘Irresponsible’ For Tracking Change

Google's change will allow advertisers to track customers' digital “fingerprints”, but UK data protection watchdog…

2 days ago

EU Publishes iOS Interoperability Plans

European Commission publishes preliminary instructions to Apple on how to open up iOS to rivals,…

3 days ago

Momeni Convicted In Bob Lee Murder

San Francisco jury finds Nima Momeni guilty of second-degree murder of Cash App founder Bob…

3 days ago