IBM was willing to pay $1bn to offload chip business

IBM was willing to pay $1bn to offload chip business

Summary: So keen was IBM to get rid of its failing chip-manufacturing business that it was willing to pay handsomely for Globalfoundries to take it — but not at any price.

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TOPICS: IBM, Processors
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Globalfoundries: reportedly wanted $2bn from IBM. Image: Globalfoundries

IBM CEO Ginni Rometty is desperately trying to offload loss-making businesses, but she is not so desperate that she will pay any price.

That became apparent when it emerged that IBM was willing to pay chip-maker Globalfoundries $1bn to take the business off its hands.

IBM's chip-making unit reportedly loses as much as $1.5bn a year and Globalfoundries was asking for $2bn, but Rometty said no.

These facts were revealed by a source "familiar with the process", according to Bloomberg.

Meanwhile, Rometty is doing her best to get IBM back into positive growth territory after more than two years — nine quarters — of falling revenues.

Globalfoundries has made no secret of the fact that its primary interest in buying the business was the intellectual property and the people — skilled IBM engineers.

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Topics: IBM, Processors

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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  • Obviously not

    That's obviously not true. I believe the real story is IBM was willing to reduce the price on the facilities by one billion but Globalfoundries said that didn't get the price low enough. The negotiations are private so there's no official details of what offer was made.
    Buster Friendly
    • Accounting semantics

      Whether IBM pays someone to take on the liability of closing their chip fab facilities and the inherent risk of environmental cleanup costs, or whether they reduce the cost of the rest of their assets by $1B if someone agrees to take the physical plants in the deal, the bottom line would be the same.
      ejhonda
      • Cleanup

        You raise a good point that not many people understand. An obsolete chip factory is not worth money. You have to pay people to make it go away, because old fabs have a tendency to turn into EPA Superfund sites with tons of toxic heavy metals and corrosive chemicals about.
        Robert Hahn