[International] Will GlobalFoundries buy IBM's chip business?


Will GlobalFoundries Inc. or some other manifestation of the oil-rich state of Abu Dhabi, be buying the chip R&D and business interests of IBM any time soon? And what would be the price?

Future Horizons Ltd. (Sevenoaks, England) has said it included the comment "We assume GlobalFoundries will purchase IBM’s semiconductor division and that Hynix/Micron will buy up the remaining smaller memory firms," in the conclusions of a report prepared by Future Horizons and Decision SA for the European Commission on the future of 450-mm wafer processing in Europe.

The idea that GlobalFoundries – a foundry owned by an Abu Dhabi sovereign wealth vehicle – could buy significant chunk of American technology leadership is likely to be controversial.

When asked why he thought the move was a valid assumption, Future Horizons analyst Mike Bryant, said he had heard rumors that discussions are taking place from enough reliable sources to consider the outcome likely.

And the move would make sense in some ways. It is in-line with IBM's strategic retreat away from hardware and towards software and consultancy and GlobalFoundries looks like a natural inheritor of IBM chip interests in New York state.

Indeed IBM's role as the paternalistic overseer of the Common Platform Alliance on process technology, alongside collaborators GlobalFoundries and Samsung Electronics Co. Ltd., looks increasingly anachronistic.

It was over a decade ago that IBM established the model of sharing R&D costs to develop chip technology. IBM is still a manufacturer of chips at East Fishkill, New York, and contributes a great deal of advanced research to various semiconductor-related consortia and initiatives it is involved in. Since it started on the 90-nm node more than a decade ago it has fostered out a number of manufacturing processes and innovations including SOI. It has also been a regular source of presentations at leading conferences such as IEDM.

But IBM does not sell chips on the open market and since it began its semiconductor collaborations it has sold off its PC business to Lenovo, as a key part of its strategic transformation.

So why does IBM need to pay for research into manufacturing processes, extreme ultraviolet lithography, and 450-mm diameter wafers?


Two or three sticking points

With GlobalFoundries bringing up its Fab 8 in Malta, New York, and their long mutual history, it would make a great deal of sense to bundle up a lot of IBM's researchers, R&D, patents and its 300-mm wafer fab at East Fishkill and hand them over.

One sticking point might be the price.

China's Lenovo paid about $1.75 billion for IBM's PC business back in 2005. But at how much would you value IBM's chip business and semiconductor research? Is $1 billion too much? Is $2 billion not enough?

Two other sticking points might be U.S. national security and national pride.

Through its investment decisions and with public authority support IBM has helped revitalize the northeast of the United States and New York State in particular. It has helped to bring GlobalFoundries, Sematech, and the Global 450 Consortium to come and work in New York. Only last September IBM pledged to contribute $3.6 billion to a $4.4 billion five-year spend on the future of chipmaking, backed by the state of New York.

While IBM must do the right thing by shareholders, it is in a position to co-operate with United States' strategic objectives, be they economic or related to the strategic ability to manufacture leading-edge chips. If IBM's chip business fell under the control of Abu Dhabi that would no longer be certain.

Source: EETimes