IBM's future remains stable but more and more limited

Jul 1, 2015 12:14 GMT  ·  By

Globalfoundries has announced today that it acquired one of the largest semiconductors manufacturers in the world. IBM Microelectronics will become part of Globafoundries' key semiconductor manufacturing consortium together with its 16,000 patents gathered over years of expertise, design and development.

Globalfoundries believes that by this acquisition it will enhance its growth in key markets, from mobility to Internet of Things to Big Data and high-performance computing. Also, using IBM's patents Globalfoundries will further on the path of building advanced technologies at 10 nm, 7 nm and beyond.

IBM has developed world-class manufacturing capabilities in both RF silicon-on-insulator (RFSOI) and high-performance silicon-germanium (SiGe) technologies which are in fact, already complementary with Globalfoundries' existing technology offerings. Using IMB's tech the company hopes it'll continue its next generation of its RFSOI that offer opportunities in the automotive and home markets.

In truth, however, IBM Microelectronics were in fact a drag for IBM while its semiconductor department became more and more unprofitable. Last year IBM managed in a desperate attempt to actually buy Globalfoundries into this deal by offering it $1 billion in order the get both the plants and the people working at them. Sources at Bloomberg, however, said that Globalfoundries wanted $2billion in order to buffer the huge costs of maintaining and the jobs intact.

The Abu Dhabi government-owned Globalfoundries company was more interested in actually buying the engineers and the key researchers from IBM for a more convenient price, but IBM insisted in keeping the design and IP control of Microelectronics even under Globalfoundries control, and become a sole client for the line of its former products.

Jobs remain but fates change

The good side of this deal is, though, that jobs remain intact and factories at East Fishkill, New York, Essex Junction and Vermont will remain operable under Globalfoundries. Lack of success from IBM of finding a successful buyer would've meant closing down the factories and up to eight thousand workers losing their jobs.

In the last year, the old IT giant has seen its semiconductor and chipmaking technology losing its strength against the unstoppable growth of Intel that emerges as the main CPU and processing unit supplier to all cloud server operators across the US and the world. Although IBM still has a huge research department, having important contracts with the US Government and Department of Defense, maintaining its stakes only in such state-funded contracts will simply have IBM disappear almost completely from the consumer market, with its former assets acquired by smaller, more ambitious companies.

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