After X86 servers, is IBM gearing up to sell its chips business too?

Summary:IBM could wriggle out of semiconductor manufacturing after several challenging quarters for its hardware business.

IBM has reportedly hired Goldman Sachs to search out potential buyers for its semiconductor business.

Claims of its search for buyers comes from the Financial Times, quoting sources familiar with the move, which could involve a complete sale of, or finding a joint venture partner for, its semiconductor business.

News of the possible sale comes just two weeks after IBM agreed to sell its x86 server business to Lenovo, after announcing it would be turning its focus to cloud and Watson-based cognitive computing .

The FT notes that there are only a few companies in the world that would be in the position to buy IBM's chip business, which the company has spent billions on over the years in order to develop its manufacturing capacity. Rivals that could acquire the business include Intel, Samsung and chip manufacturing groups GlobalFoundries and TSMC.

Besides building chips for its own servers, IBM does third-party contract manufacturing and used to supply processors for Sony's and Microsoft's gaming consoles. However, both companies have since moved to AMD's chips, according to the Wall Street Journal.

According to the paper, research company Bernstein forecasts the unit's estimated revenue will fall from last year's $1.75bn to $1.45bn this year, maintaining consistent pre-tax losses of $130m over both periods.

OEM revenues from IBM's chip business were down 33 percent year on year when it reported its fourth quarter 2013 earnings. The unit sits within IBM's systems and technology hardware division, which has seen a tough few quarters with Q4 revenues down 26 percent from a year ago to $4.3bn.

That came off the back of a tough third quarter for IBM's hardware business, particularly in China where hardware revenues declined 22 percent from a year ago.

IBM had not responded to ZDNet's request for comment at the time of publication.

More on IBM

Topics: IBM, Processors

About

Liam Tung is an Australian business technology journalist living a few too many Swedish miles north of Stockholm for his liking. He gained a bachelors degree in economics and arts (cultural studies) at Sydney's Macquarie University, but hacked (without Norse or malicious code for that matter) his way into a career as an enterprise tech, s... Full Bio

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