IBM Pay $1.5B to Remove Chip Manufacturing Headache

IBM has just secured a deal with Globalfoundries Inc. to offload their chip-manufacturing unit for a cool $1.5 billion today. The news has been leaked by “two people with knowledge of the matter” and comes around the same time that IBM released an announcement telling all to watch out for a big announcement coming tomorrow.

Ginni Rometty, IBM’s CEO, has reportedly been in talks about this deal for months with Globalfoundries. Finally securing a deal to offload their chip manufacturing responsibilities for $1.5 billion with a return of $200 million worth of assets – making it a total $1.3 billion expenditure.

The chip-manufacturing unit has been a long-term headache of IBM’s, with them seemingly happy to finally put it behind them following some frustrating unprofitable results. The company taking it on, Globalfoundries Inc, is owned by an investment arm of the Abu Dhabi government. It will be utilizing these facilities to increase expertise of its engineers in the fundamentals of semiconductor design and manufacturing.

The deal is said to see Globalfoundries supplying IBM with Power processors in return for IBM sharing its intellectual property, allowing Globalfoundries to access said technology and guarantee a steady flow of supply/demand. The $1.5 billion owed will be paid over the course of three years and will not see IBM losing its chip manufacturing process completely, just think of it as a partial outsourcing.

IBM and Globalfoundries have both currently declined to comment publicly on the matter, but all should be revealed tomorrow.

Image courtesy of Delimiter