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posted by n1 on Wednesday October 22 2014, @12:55AM   Printer-friendly
from the you-get-what-you-pay-for dept.

GlobalFoundries Inc. has agreed to acquire International Business Machines Corp.'s microelectronics division. Under the terms of the agreement, GlobalFoundries will become "the exclusive server processor semiconductor technology provider [to IBM] for 22 nanometer (nm), 14nm and 10nm semiconductors for the next 10 years."

From Marketplace:

The largest contract chip maker, Taiwan Semiconductor Manufacturing Company, quadrupled its capital spending in the last five years from $2.5 billion to $10 billion. If you are a company like IBM you have to look at those numbers and ask yourself, does it make sense to take a loss in chip making when you could just buy them from someone else?

IBM's answer as of today is no, it doesn't.

From AnandTech:

By divesting themselves of their semiconductor manufacturing business, IBM is cutting loose a business that is losing them money, but it is also a necessary step to enable the consolidation of manufacturing rather than a dissolution of the business entirely. Though in better shape than IBM's business, GlobalFoundries has their own struggles with technology and volume, so taking on IBM's business will allow the two businesses to be consolidated and ideally a larger, stronger semiconductor manufacturer to emerge.

Overall then, the deal sees GlobalFoundries taking on everything related to semiconductor manufacturing from IBM except for IBM's semiconductor R&D division, which IBM will hold on to.

GlobalFoundries spun out of AMD in 2009. IBM had been negotiating the transfer of its chipmaking division for some time, and has already sold off its PC and x86 server businesses to Lenovo. IBM has attempted to bolster its Power chips by licensing the architecture through the ARM-like OpenPower Consortium. Earlier this month, IBM announced Power8 servers that would incorporate Nvidia GPU acceleration.

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IBM has recently delivered a string of disappointing quarters, and announced recently that it would take a multibillion-dollar hit to offload its struggling chip business. But Will Knight writes at MIT Technology Review that Watson may have the answer to IBM's uncertain future.

IBM's vast research department was recently reorganized to ramp up efforts related to cognitive computing. The push began with the development of the original Watson, but has expanded to include other areas of software and hardware research aimed at helping machines provide useful insights from huge quantities of often-messy data. “We’re betting billions of dollars, and a third of this division now is working on it,” says John Kelly, director of IBM Research, said of cognitive computing, a term the company uses to refer to artificial intelligence techniques related to Watson.

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  • (Score: 0) by Anonymous Coward on Wednesday October 22 2014, @02:39AM

    by Anonymous Coward on Wednesday October 22 2014, @02:39AM (#108508)

    Is it time for IBM to take the Machines out of their name? They can be Indian Business Methods or International Business Movers.

    • (Score: 2) by takyon on Wednesday October 22 2014, @03:34AM

      by takyon (881) <reversethis-{gro ... s} {ta} {noykat}> on Wednesday October 22 2014, @03:34AM (#108530) Journal

      They still have innovative [bbc.com] ideas [venturebeat.com]. Their strategy assumes that their R&D and patent licensing will be more profitable than actual chip manufacturing, and they're probably right considering the $1.5 billion a year loss from that division.

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    • (Score: 0) by Anonymous Coward on Thursday October 23 2014, @07:17PM

      by Anonymous Coward on Thursday October 23 2014, @07:17PM (#109315)

      Is it time for IBM to take the Machines out of their name? They can be Indian Business Methods or International Business Movers.

      ITYM Indian Business Manglers

  • (Score: 2) by meisterister on Wednesday October 22 2014, @03:46AM

    by meisterister (949) on Wednesday October 22 2014, @03:46AM (#108541) Journal

    It does really sadden me to see one of the big scary computer companies leave yet another industry, but on the other hand, AMD is going to make a killing if they have access to those fabs...

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    • (Score: 1, Informative) by Anonymous Coward on Wednesday October 22 2014, @02:06PM

      by Anonymous Coward on Wednesday October 22 2014, @02:06PM (#108668)

      AMD is going to make a killing
      I dont know about that. Basically MS/Sony/Nintendo has paid them quite well to freeze their process nodes to make game consoles. IBM had the same problem and why Apple moved away from them. Now those two have merged together. TSMC is about 1 process node ahead of them and Intel is easily 2.

      We shall see. But getting in bed with a console manufacture may not be such a hot idea. You basically have to be capable of making the exact same chip for 3-4 years. As the game makers expect each console to basically act exactly cycle count the same as the first one off the line. Basically jumping off the moores law bandwagon while your competition moves along with it.

      My guess is pretty soon globalfoundries is spun public after the money value has been extracted. It probably will have a fairly high debt load and two major customers with dwindling market share.

      • (Score: 2) by tibman on Wednesday October 22 2014, @04:21PM

        by tibman (134) Subscriber Badge on Wednesday October 22 2014, @04:21PM (#108746)

        Having 3-4 years of continuous income sounds like the kind of problem a business wants.

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