IBM and GlobalFoundries' chip tie-up unties

IBM and GlobalFoundries' chip tie-up unties

Summary: IBM and GlobalFoundries' plan to merge their chip businesses has reportedly fallen through.

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TOPICS: Processors, IBM
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IBM has reportedly ended talks to sell off its chip-making business to GlobalFoundries.

The collapse of the potential deal came after the two companies could not agree on terms for the merger, Bloomberg reported on Friday.

GlobalFoundries' interest in the unit stemmed more from the acquiring its engineering expertise and intellectual property, rather than buying the chip-making facilities, according to Bloomberg.

Back in February, it emerged that IBM had brought in Goldman Sachs to try to find a buyer or a joint venture partner for the chip business, which is thought to be a loss-making operation.

Getting rid of the chip business would be a logical move for IBM CEO Ginny Rometty, who is trying to re-focus IBM away from its traditional hardware roots and towards more profitable areas such as research and development and cloud computing. Earlier this year, it agreed to sell its X86 hardware business to Lenovo for $2.3bn, shortly after announcing that it would be putting more emphasis on Watson, its cognitive computing business.

However, the company remains interested in chips. Last month, it said it plans to spend $3bn on R&D over the next five years to make sure processors can keep up with the demands of cloud and big data applications, including examining options for post-silicon chips.

IBM and GlobalFoundries did not respond to requests for comment.

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Topics: Processors, IBM

About

Colin Barker is based in London and is Senior Reporter for ZDNet. He has been writing about the IT business for some 30-plus years. He still enjoys it.

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3 comments
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  • R&D is a type of cost

    It is not generally a profitable business segment.

    Per the article, "... trying to re-focus IBM away from its traditional hardware roots and towards more profitable areas such as research and development and cloud computing."
    mfgillia
    • Depends

      If you're focused on hardware then the R&D you do as part of your manufacturing is a cost. If you perform R&D for others, then it's a profit center.
      ejhonda
  • R&D generates patents

    and patents can be big money earners. IBM has always been a major patent holder.
    CageySee