IBM Chip Suitors Rumored To Narrow To GlobalFoundries
GlobalFoundries has reportedly emerged as the leading candidate to acquire IBM's remaining semiconductor manufacturing facilities.
The Wall Street Journal reported on April 3 that Intel and foundry giant Taiwan Semiconductor Manufacturing Corp were also in talks with IBM. TSMC is believed to have dropped out of negotiations.
A deal with IBM would deliver to GlobalFoundries the East Fishkill, New York fab where IBM manufacturers chips for its Power and System z mainframe servers.
As soon as IBM announced its landmark deal to sell off its System x business to Lenovo back in January, talk turned to IBM's chip business. In early February, as EnterpriseTech previously reported, the rumors started going around that GlobalFoundries, Intel, TSMC, and Samsung had all keen kicking the tires on at least some portion of IBM's chip business. Those reports also said IBM was exploring the possibility of setting up a joint venture as well as an outright sale.
IBM CEO Ginni Rometty committed the company to hardware and semiconductor R&D but not chip manufacturing in the company's latest annual report. "IBM will remain a leader in high-performance and high-end systems, storage and cognitive computing, and we will continue to invest in R&D for advanced semiconductor technology," Rometty said last month in releasing the company's annual report.
Given the very low volumes for Power and System z chips, it is hard to see how IBM could justify the cost of chip scaling beyond 22 nanometers.
Indeed, the IBM-led OpenPower initiative founded in 2013 has as one of its goals the fostering other Power chip designers and other foundries to make them, particularly for Power chips used in servers and other gear in cloud datacenters.
As the steady Asian migration of the global semiconductor industry continues, struggling American chip makers like AMD have forged wafer supply agreements with GlobalFoundries. (The latter includes the chip manufacturing operations of the former, which were spun out several years ago from AMD.) Given the brutal economics of chip scaling beyond the 22 nanometer node, it is likely that IBM would do the same while retaining its role as a designer of server, storage, and perhaps other chips.
The latest rumors reported in the WSJ suggest that IBM is trying to get more than $2 billion for its chip operations, and that potential bidders are willing to spend maybe a little bit more than $1 billion. It is interested to recall that the Lenovo System x deal, which was rumored for more than a year before it was struck, had a similar gap, with the original asking price said to be somewhere between $5 billion to $6 billion, but with Big Blue eventually settling for $2.3 billion.
