IBM's efforts to sell off its chip unit appear to have broken down, with reports that Globalfoundries Inc. (Santa Clara, Calif.) is not interested in paying anywhere near IBM's asking price for its loss-making semiconductor division.
Globalfoundries has not been prepared to meet IBM's asking price, according to a Bloomberg that referenced " people familiar with the process." It is also seems clear that the two companies' interests are somewhat tangential; IBM is looking to off-load its own chip manufacturing in New York state while Globalfoundries, which is owned by an investment vehicle of the Abu Dhabi government, has its own wafer fab in upstate New York and is more interested in the IBM semiconductor patent portfolio and research knowledge that IBM has built up.
There have been reports that Globalfoundries in recent days has been running job advertisements in local press that may have served to make the point that it doesn't need to pay a high price to IBM to acquire the services of IBM-trained workers.
The news that IBM's chip business was up for sale broke in February but it was immediately obvious that very few companies would be in a position to acquire it (see IBM Chip Unit Sale Would Send Tremor Through The Industry). Globalfoundries, which has been a close collaborator with and supplier to IBM has been the clear favorite to close such a deal. The only other possibility would probably require the U.S. government to get involved and drive a sale of IBM's chip business to Intel for reasons of strategic national interest.
Despite the possible fate awaiting the chip business IBM announced earlier this month that it would invest $3 billion over the next five years on the research and development of technologies to move integrated circuit manufacturing to 7nm and beyond (see IBM Pumps $3 Billion Into Nanometer Chip R&D).
What remains unclear is whether IBM intends to package up its R&D and IP portfolio with a chip business sales or wanted to maintain this expensive research within IBM and just off-load its own manufacturing.
The age of the IBM facilities and means they are not useful to leading-edge chip companies such as Globalfoundries and IBM is reduced to a position where it must almost pay a buyer to take on these facilities and the workers employed there.
IBM has been involved in manufacturing process collaborations with all the major digital logic chip companies, with the exception of Intel and Taiwan Semiconductor Manufacturing Co. Ltd. The companies it has licensed technology to and shared development with include Globalfoundries, Samsung, SMIC, STMicroelectronics and United Microelectronics Corp.
It now appears that a more complex, multiparty deal will be required to help IBM CEO Ginni Rometty get rid of the chip business and meet 2015 earnings targets.
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