IBM Sells Microelectronics Business To GLOBALFOUNDRIES

IBM Sells Microelectronics Business To GLOBALFOUNDRIES
CeBIT 2011 – IBM Patrick / Flickr CC BY 2.0

Last June 29, GLOBALFOUNDRIES has announced that they had received clearance from the Committee on Foreign Investment in the United States (CFIUS) to go through with their proposed acquisition of IBM’s microelectronic business. The proposal for the said acquisition was made public last October 20, 2014. This has put them a step closer to completing what IBM has valued to be a $1.5 billion transaction with the cash consideration expected to be paid over the course of the next three years by IBM.


Today, GLOBALFOUNDRIES announces that it has completed the said acquisition. Chief Executive Officer Sanjay Jha could not be more pleased about their recent purchase. In a statement, he remarks, “Today we have significantly enhanced our technology development capabilities and reinforce our long-term commitment to investing in R&D for technology leadership. We have added world-class technologists and differentiated technologies, such as RF and ASIC, to meet our customers’ needs and accelerate our progress toward becoming a foundry powerhouse.”

According to IBM the deal between them and GLOBALFOUNDRIES will mean that “GLOBALFOUNDRIES will gain substantial intellectual property and an influx of the best technical teams in the semiconductor industry, which will support its path to advanced process geometrics at 10nm and below. Additionally, the transaction opens up business opportunities for GLOBALFOUNDRIES in industry-leading radio frequency (RF) and specialty technologies and ASIC design capabilities.”

Aside from that, the acquisition will also include IBM’s several semiconductor manufacturing operations and facilities which are located in East Fishkill, New York and Essex Junction, Vermont. Moreover, it will also make GLOBALFOUNDRIES the exclusive supplier of server processor semiconductor technology to IBM for the next 10 years. This will include 22 nanometer (nm), 14nm and 10nm semiconductors.

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Furthermore, IBM admits that the said sale of their microelectronic business makes a lot of sense. As they explained, “While IBM has world-class technology and intellectual property, the company has lacked scale. As a subscale business, IBM’s Microelectronic business has been generating losses.” They added, “Semiconductor manufacturing is such a case, where scale is critical for competitive cost. As IBM continues to perform the fundamental research, as well as semiconductor circuit and system design, a trusted manufacturing supplier will provide significant economic leverage.”

The said acquisition will also make GLOBALFOUNDRIES the owner of more than 16,000 more patents and applications. This will put them in possession of “one of the largest semiconductor patent portfolios in the world.”

Following this deal, IBM has said that GLOBALFOUNDRIES is expected to provide employment for “substantially” all IBM employees working in the New York and Vermont facilities. The only ones to remain with IBM will be a team of semiconductor server group employees.