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IBM rejects GlobalFoundries’ proposal for semiconductor assets

International Business Machines Corp. and GlobalFoundries have ended negotiations regarding acquisition of IBM’s semiconductor manufacturing assets by the contract maker of chips. The two companies failed to agree on the price, according to a media report.

Earlier this year it was reported that IBM wanted $2 billion for its money-losing semiconductor manufacturing division, but the potential buyers were ready to offer more than a billion, but less than two billions. IBM reportedly also wanted to retain a lot of chip- and chip manufacturing-related intellectual property, besides, it wanted the new owner to continue producing IBM’s processors (possibly, on special terms).

IBM’s semiconductor manufacturing assets include a rather old 200mm fab in Burlington, Vermont, and a relatively advanced 300mm facility in East Fishkill, New York, in addition to various patents and intellectual property. Apparently, GlobalFoundries did not want to pay $2 billion for outdated fabs and the negotiations between the two companies ended recently, reports Bloomberg news-agency. Even though semiconductor manufacturing business is not profitable for IBM, the company decided to retain it.

intel_ireland_semiconductor_chip_fab_300mm_wafer

It should be noted that GlobalFoundries could face a number of difficulties acquiring IBM’s chip making unit. IBM’s 200mm facility in Burlington, Vermont, still produces certain high-end radar and other components for the U.S. government using SiGe and SOI processes, according to a media report. The U.S. authorities demand that fabs producing such chips would belong to the U.S. companies, which made it virtually impossible to sell such facility to GlobalFoundries, which is controlled by Abu Dhabi’s Mubadala.

IBM and GlobalFoundries did not comment on the news-story.

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KitGuru Says: Recently IBM announced a $3 billion chip R&D investment plan, which will further boost its portfolio of patents. However, with outdated fabs IBM’s semiconductor production business will remain unprofitable.

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