IBM to Pay Globalfoundries $1.5 Billion to Take Chip Business

By Jeffrey Burt  |  Posted 2014-10-20 Print this article Print
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Part of that effort is getting rid of underperforming or commoditized businesses, according to IBM's Rosamilia.

"IBM has always taken the long view of its business strategy, continuously reinventing—from divesting its PC business to more recently its x86 business," he wrote, adding that the Globalfoundries deal was another example. "IBM's proven model for success is driven by focusing on the high-value segments of our systems portfolio driven by the unique innovation that only IBM can bring. Globalfoundries' business model is to innovate through high-volume semiconductor manufacturing, which is enhanced by economies of scale."

For Globalfoundries, the deal could be a boon, according to Endpoint Technologies' Kay.

"IBM's lemons may well be Globalfoundries' lemonade, as the one key element that IBM has been unable to produce Globalfoundries has in spades: volume," he wrote. "If Globalfoundries can get the [semiconductor] operations up to a decent scale, it can make money with them. And there are some real gems among the assets. IBM's Application-specific integrated circuit (ASIC) specialty business and the radio-frequency (RF) parts that it sells to the phone industry are in high demand."

Globalfoundries CEO Sanjay Jha broadens the company's capabilities in the highly competitive foundry market, particularly as Globalfoundries looks to expand its presence in the mobile chip space.

"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," Jha, former CEO of Motorola Mobility, said in a statement.



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