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For decades, IBM was synonymous with innovation, cutting-edge technology, and heady research and developments that pushed the boundaries of what computers were capable of doing. As of now, that storied legacy is coming to an end — or at the very least, changing hands. After months of will-they-won’t-they speculation, IBM and GlobalFoundries have inked a deal in which GF will take over IBM’s chip manufacturing facilities. IBM is paying GlobalFoundries around $1.5 billion in cash to take the loss-making unit off its hands.
Updated: IBM has confirmed the deal, noting that it will exclusively use GlobalFoundries for “22nm, 14nm, and 10nm semiconductors for the next 10 years.” It also says that its previously announced $3 billion investment in next-gen semiconductors over the next five years won’t be affected by the deal.
The terms of the deal state that GF will continue manufacturing Power processors for IBM for at least the next ten years and that the manufacturing centers in East Fishkill will remain open and fully staffed. Whether or not this translates into no job losses whatsoever isn’t clear, but New York State has aggressively negotiated job deals with IBM in the past and is likely to continue doing so with GlobalFoundries. It’s not clear if IBM is transferring jobs, IP, foundries, and land to GlobalFoundries or if the two manufacturers have worked out a leasing arrangement. GlobalFoundries isn’t just getting the right to build Power processors: it’s also won access to patents on Watson, IBM’s mainframe products, and the expertise of thousands of engineers across New York State.
It’s certainly interesting that IBM, whose foundries have always been regarded as strong, if small, is paying GlobalFoundries $1.5 billion in cash – $1.3 billion net, including a $200 million transfer of unspecific assets in the other direction — over three years to take over its own business segment. IBM’s chip-making unit reportedly makes a big loss — as much as $1.5 billion per year — which is probably why CEO Ginni Rometty, who is keen to boost the company’s profits, is jettisoning it.
IBM has been behind some of the most cutting edge work in semiconductors. What happens now? (This is a 16-chip version of IBM’s neurosynaptic (brain-like) computer.)
This shift completes IBM’s exit from the industry it helped found — while the company will still sell Power hardware and presumably maintain some research projects, divesting itself of its fab plants leaves TSMC, GlobalFoundries, Intel, and Samsung as the only companies with cutting-edge deployments scheduled in the next few years.
A murky future
For years, Samsung, IBM, and GlobalFoundries prominently positioned themselves as a partnership that would challenge TSMC and Intel through the Common Platform — a set of mutually agreed-upon manufacturing characteristics that would make it easier for customers to ramp products at different foundries and leverage the IP assets of all three semiconductor companies. Rumors earlier this year pointed towards an end for that project, and such a move now seems inevitable. Now that GlobalFoundries owns IBM’s fabs, and has licensed Samsung’s 14nm process, the entire Common Platform concept is simultaneously fulfilled and outdated.
Read: TSMC announces first 16nm FinFET results, unveils 10nm roadmap
IBM Research in Yorktown Heights, New York, will hopefully be keeping its chip fab facilities
With that said, however, we’re a long way from the heady days of 2010 and 2011 when GF confidently predicted its own 28nm ascendance and strong competition against TSMC. The company has been quiet about its own 20nm plans and customers — it’s assumed that AMD is doing 20nm work there, and we know that the 14nm deal with Samsung is ramping up strong thanks to discussions at ARM’s TechCon earlier this month, but specific details remain elusive. Integrating new business units always takes time and causes a certain degree of disruption — whether this will have a knock-on effect on GF’s 20nm or 14nm roadmaps isn’t known. It’s also not clear if this means GF will transition IBM’s foundries to more advanced process nodes, or what the long-term roadmap for those facilities is.
Presumably this move won’t change anything related to IBM’s OpenPower initiative — if anything, GF may have freedom to build Power cores for a wider audience. More details on this announcement should be available after IBM’s quarterly conference call this morning, but both Big Blue and GlobalFoundries are currently maintaining radio silence.
Now read: IBM cracks open a new era of computing with brain-like chip
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