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IBM To Shed Loss-Making Semiconductor Unit

IBM To Shed Loss-Making Semiconductor Unit

20.10.2014 09:47

International Business Machines (IBM) has struck a deal to get rid of its unprofitable chip-making unit, media reports have claimed. They said the recipient would be investment giant Globalfoundries. The Wall Street Journal reported Monday that IBM was finally successful in getting of its unloved semiconductor.

International Business Machines (IBM) has struck a deal to get rid of its unprofitable chip-making unit, media reports have claimed. They said the recipient would be investment giant Globalfoundries.



The Wall Street Journal reported Monday that IBM was finally successful in getting of its unloved semiconductor operations. But shedding the unit comes at a cost, both the WJS and Bloomberg said, citing experts familiar with the matter.



They said IBM would pay investment company Globalfoundries a total of $1.3 billion (1 billion euros) to take the chip operations off its hands.



"After months of on-again, off-again talks, IBM Chief Executive Officer Ginni Rometty finally struck a deal to jettison the chip-making unit, which has been a drag on earnings," Bloomberg reported on its web page.



Long-term partnership



Earlier reports indicated that the production of microelectronics accounts for less than 2 percent of IBM's revenue, with the division estimated to lose as much as $1.5 billion annually.



Bloomberg explained that Globalfoundries, owned by an investment arm of the government of Abu Dhabi, was taking on the unit to tap the expertise of its engineers in the fundamentals of semiconductor design and manufacturing.



In a 10-year partnership, Globalfoundries would supply IBM with Power processors in exchange for access to IBM's intellectual property.



hg/uhe (Bloomberg, Reuters, dpa)











 
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