IBM Pays $1.5 Billion to Globalfoundries to Acquire it’s Loss Making Chips Business

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ibm-logo-6IBM will pay Globalfoundries $1.5 to run it’s global commercial semiconductor technology business, including intellectual property, world-class technologists and technologies.

The $1.5 billion is expected to be paid in three years to Globalfoundries to shoulder IBM’s losss making unit.  The cash consideration will be adjusted by the amount of working capital which is estimated to be $200 million.

Globalfoundries will be IBM’s server processor semiconductor technology provider for 22 nanometer (nm), 14nm and 10nm semiconductors for the next 10 years. The deal aims to help IBM to further focus on fundamental semiconductor research and the development of future cloud, mobile, big data analytics, and secure transaction-optimized systems.

Globalfoundries will work with the Colleges of Nanoscale Science and Engineering (CNSE), SUNY Polytechnic Institute, in Albany, N.Y. on semiconductor technology development and manufacturing.

Dr. Sanjay Jha, CEO, Globalfoundries said, “We can now offer our customers a broader range of differentiated leading-edge 3D transistor and RF technologies, and we will also improve our design ecosystem to accelerate time-to-revenue for our customers.  This acquisition further strengthens advanced manufacturing in the United States, and builds on established relationships in New York and Vermont.”

Globafoundries will run IBM’s semiconductor manufacturing operations and facilities in East Fishkill, New York and Essex Junction, Vermont. Globalfoundries will also acquire IBM’s commercial microelectronics business, which includes ASIC and specialty foundry, manufacturing and related operations and sales.

IBM and Globalfoundries began collaboration in 2009, and they expect the  acquisition to bolster semiconductor manufacturing and technology development in the United States.  Globalfoundries aims to invest approximately $10 billion in 2014-2015 in the business.