IBM is likely to spend $1.5 billion to sell its semiconductor business to Globalfoundries.
The enterprise IT firm will be making an announcement on Monday.
A Bloomberg news report said IBM will pay Globalfoundries the $1.5 billion over three years to get out of the loss making chip business.
Manufacturing microelectronics accounts for less than 2 percent of IBM’s revenue. The division loses as much as $1.5 billion a year.
IBM, as per a major strategy initiative, will pay Globalfoundries $1.5 billion to take the chip business operations off its hands, Bloomberg News reported on Sunday.
This apart, IBM put out an advisory Sunday, stating that it would announce a major business announcement on Monday morning along with its third-quarter results.
IBM had been seeking a buyer for its chipmaking division since at least 2013.
As part of the deal, IBM will receive $200 million worth of assets, making the net value of the deal $1.3 billion.
Globalfoundries, owned by an investment arm of the government of Abu Dhabi, is taking on the unit to tap the expertise of its engineers in the fundamentals of semiconductor design and manufacturing.
As per a 10-year deal, Globalfoundries will supply IBM with Power processors in exchange for access to IBM’s intellectual property. That would allow Globalfoundries to access key chipmaking technology and guarantee supply of chips that IBM needs for its systems, like mainframe computers and its Watson data-analytics technology.
Baburajan K
editor@infotechlead.com
