IBM offered GlobalFoundries $1 billion to take its foundry business away

As reported, the deal between International Business Machines Corp. and GlobalFoundries over chip manufacturing assets of the former has failed to materialize because the latter did not want to pay enough to the former. However, according to a new report, it was IBM, who was offering money to GlobalFoundries to take its money-losing business.

IBM offered GlobalFoundries around $1 billion (€0.747 billion, £0.5933 billion) to persuade it to take-over its foundry business, but GlobalFoundries wanted $2 billion, reports Bloomberg news-agency citing sources familiar with negotiations. IBM’s chip manufacturing business loses $1.5 billion (€1.1205 billion, £0.89 billion) a year and it would take a lot of time and money to restructure it and make it profitable.

GlobalFoundries wanted to obtain IBM’s chip manufacturing intellectual property, engineers and, perhaps, some customers, but not the fabs. 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. It is unclear whether IBM was willing to give away all of its semiconductor-related IP since the company continues to research chips in general. Moreover, it is unknown what IBM’s customers, including those from the U.S. government, thought about the deal.

It is fully possible that IBM and GlobalFoundries will re-start negotiations in the future.

“The first rule of negotiating anything is you need to be able to walk away from a deal,” said Jim McGregor, founder of Tirias Research. “This might just be posturing. You may see this resurrect itself in three to six months.”

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

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KitGuru Says: Given that the future of chip manufacturing is unknown due to rather tough economic situation and unclear prospects, the take-over of IBM’s fabs, which require investments, may just not happen in the foreseeable future.

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