IBM pays $1.5 billion to get rid of foundry business

[Guest]

IBM is getting rid of another part of their business, giving it to Global Foundries and paying $1.5 billion for them to keep it operational and have access to the production lines for their POWER chips, which they will keep developing.

IBM announced today that GlobalFoundries will acquire its chip manufacturing business in a deal expected to close in 2015. IBM will pay GlobalFoundries $1.5 billion over the next three years to complete the transfer but will presumably save more than that over the long haul by offloading a costly chipmaking operation.

IBM designs the chips for its Power servers and mainframe computers and will continue to invest in chip research even after outsourcing manufacturing to GlobalFoundries. IBM is continuing a previously announced $3 billion investment over five years in semiconductor technology research, and the company said that "GlobalFoundries will have primary access to the research that results from this investment through joint collaboration at the Colleges of Nanoscale Science and Engineering (CNSE), SUNY Polytechnic Institute, in Albany, NY." Additionally, GlobalFoundries will become "IBM's exclusive server processor semiconductor technology provider for 22 nanometer (nm), 14nm and 10nm semiconductors for the next 10 years."

http://arstechnica.com/information-technology/2014/10/struggling-ibm-pays-1-5-billion-to-dump-its-chipmaking-business/

http://www.bbc.com/news/business-29689344

 

Edit: Since IBM supplies chips to some very serious governmental agencies, the deal will require approval by 'as many as 200 regulators worldwide' potentially delaying the deal.

http://techreport.com/news/27241/ibm-globalfoundries-deal-faces-regulatory-hurdles

[Sidiox]

Seems a bit of weird action imo

I hope IBM will still be able to run properly, I really like them

[Trik'Stari]

So they are selling it, but it's still working for them??

 

Why?

[Imabigmac]

What's IBM income from? Chips, business PCs, servers? I'm beginning to get lost in their plans for the future.

[vm'N]

So they are selling it, but it's still working for them??

 

Why?

Fabs is expensive. Thats why

[Trik'Stari]

Fabs is expensive. Thats why

But, isn't hiring someone else to do it just as expensive?

[vm'N]

But, isn't hiring someone else to do it just as expensive?

No. GloFo will still manufacture for others. So the have a higher production volume, which result in lower production cost.

EDIT: This also means that IBm do not have to keep advancing their fabs which also is incredible expensive. Check out how much Intel use to advance their fabs.

[Guest]

So they are selling it, but it's still working for them??

The capacities they need apparently justify the continuous investment in development of new processes. It's losing money.

That said they sold their x86 server business and that was profitable.

 

Personally I get this sense that they want all the money to concentrate on taking over the world by investing in their artificial intellect/big data analysis development.

[peanutsrevenge]

Let's hope that cash injection helps GloFo bring process node shrinks to market quicker increasing their revenue to enable them to continue to keep up with Intel.

[vm'N]

Let's hope that cash injection helps GloFo bring process node shrinks to market quicker increasing their revenue to enable them to continue to keep up with Intel.

If I remember correctly, Samsung is licensing out some of their lithography technologies to GloFo (or was it TSMC (I cannot remember)).

They should be set.

[Toddwjp]

IMB constantly shift focus and business using there wealth of talent to advance different areas at different times. rather then trying to stay competitive in a market they advanced to another

[Jaybird]

That's a huge risk but I can see that this department has out grown is position. Excellent choice by IBM.

[dalekphalm]

I think GloFo comes out of this deal the best. I REALLY hope that it will help GloFlo with their node technology. They've always been behind the curve from Intel. IBM is probably the only monster that could match Intel's fabs atm, especially on the CISC front. GloFo getting access to that wealth of resource could help them immeasurably.

 

What does IBM get out of the deal? Well, they save on costs. A LOT! Running a Fab is an expensive business. They also get priority access for their own POWER architecture chips. I hope this will benefit them both, and also as an indirect benefit, I hope it helps AMD as well (Since GloFo is one of their primary Fabs).

[c.bert]

seems like it is essential for them to carrying on functioning with a decrease in profit announced yesterday and their stock took a 7 percent nose dive already today which is not great for them at all

[Guest]

I read that Introduction to Semiconductor Physics article on Anandtech recently and it really boggles my mind what lengths fabs have to go to to make features so tiny.

I'm glad I can enjoy the benefits of modern technology, but at the same time letting it get so far away from the common folk's ability to understand it is leaving them in a very powerless state, at the mercy of companies that are ruthless, infinitely more organized than individuals and in many cases above the law.

[dalekphalm]

I read that Introduction to Semiconductor Physics article on Anandtech recently and it really boggles my mind what lengths fabs have to go to to make features so tiny.

I'm glad I can enjoy the benefits of modern technology, but at the same time letting it get so far away from the common folk's ability to understand it is leaving them in a very powerless state, at the mercy of companies that are ruthless, infinitely more organized than individuals and in many cases above the law.

Unfortunately, things like semiconductor physics, and microprocessor architecture and design will be out of the general public's knowledge level for decades or centuries - if ever.

 

The trade off of a modern, high tech society is that the average person does not know how most things work. Our society cannot work otherwise. The average person simply can't learn a working grasp of CPU fabrication.

 

However, I don't think we have to fear anything like the "Idiocracy" future, because while the average person doesn't learn about this stuff, we are attracting more and more people into highly skilled fields.

[Kherm]

That is one big-arse IBM logo

[ItsComrade]

So... how does IBM plan to remain relevant? Are they still relevant even now?

[dalekphalm]

So... how does IBM plan to remain relevant? Are they still relevant even now?

lol... are you serious?

 

IBM is one of THE biggest players in the tech industry. They are more relevant then Samsung, unless you're looking at Mobile Phones only.

 

IBM doesn't play on the consumer side, because that's small time nothing for them. They are the kings of Enterprise Server environments. Not to mention, they are at the absolute forefront of Research and Development, and advanced technology. They invent many of the technologies that eventually trickle down into consumer use. They're also one of the biggest players with Quantum Computing research, and with atom based computing (They made a "movie" that said "IBM" that was literally made up of individual atoms... just because they could).

 

Intel and Microsoft are probably one of the few companies at least - or more - relevant then IBM. Maybe Google too since they do a lot of R&D.

 

Relevant to a consumer? Maybe not. But since when has that mattered? SpaceX isn't relevant to consumers, yet they're still immeasurably important to the North American economy and to current Space technology advancement.

[Guest]

That is one big-arse IBM logo

I just saved the first one that came up in Google image search.

Although, now that I think of it, in the spirit of the article, I should have taken a piece of it off.

[thatguyjerry]

Does anyone think we'll see an impact on AMD?

[Guest]

Does anyone think we'll see an impact on AMD?

From what I understand they are already set on the next manufacturing process being Samsung's 14nm.

AMD's main problem isn't GloFo's tech. It's their low performance per thread architecture.

[dalekphalm]

Does anyone think we'll see an impact on AMD?

I do, but not for a while. AMD is committed to Samsung's 14nm node for Zen (so the rumours go, etc). But I do believe we will see this helping AMD in a couple years.

 

From what I understand they are already set on the next manufacturing process being Samsung's 14nm.

AMD's main problem isn't GloFo's tech. It's their low performance per thread architecture.

While it isn't their "Main" problem, GloFo is always behind the curve compared to Intel, so it certainly does hurt AMD that they're always playing catch up.

[ItsComrade]

lol... are you serious?

 

IBM is one of THE biggest players in the tech industry. They are more relevant then Samsung, unless you're looking at Mobile Phones only.

 

IBM doesn't play on the consumer side, because that's small time nothing for them. They are the kings of Enterprise Server environments. Not to mention, they are at the absolute forefront of Research and Development, and advanced technology. They invent many of the technologies that eventually trickle down into consumer use. They're also one of the biggest players with Quantum Computing research, and with atom based computing (They made a "movie" that said "IBM" that was literally made up of individual atoms... just because they could).

 

Intel and Microsoft are probably one of the few companies at least - or more - relevant then IBM. Maybe Google too since they do a lot of R&D.

 

Relevant to a consumer? Maybe not. But since when has that mattered? SpaceX isn't relevant to consumers, yet they're still immeasurably important to the North American economy and to current Space technology advancement.

 

I understand that, but you may be underestimating how much relevance to a consumer is important. 

[dalekphalm]

I understand that, but you may be underestimating how much relevance to a consumer is important. 

For IBM? None. IBM doesn't care about the consumer, because they don't really have any consumer level products anymore. In the high tech industry and enterprise focused field that IBM lives in, the consumer is largely irrelevant.

 

Indirectly they are extremely relevant to the consumer though. Many of the online services we use, or the businesses we work for, run on IBM servers (We have 3 at work, for example, and they're like $30,000 servers each). Tons of websites are run off IBM servers.

 

Example: How relevant is BHP Billiton to consumers? A lot? A little bit? None? You mean the average consumer has never even heard of this multi billion dollar company? Yep. BHP Billiton is worth over $170 BILLION USD in market value. They're the largest mining company (as of 2014) in the world. But I challenge you to find an average consumer who's ever even heard the name before. Consumer relevance is not required for extreme and overwhelming success in your particular industry.