Globalfoundries May Acquire IBM’s Semiconductor Fab

From X-bit Labs: Globalfoundries was established just over a year ago, but thanks to financial resources of Advanced Technology Investment Company and intellectual property inherited from AMD and its partners, such as IBM, the company is now the world’s third largest contract maker of semiconductors with the world’s most advanced process technologies. The firm said many times that it is on acquisition spree and an analyst believes that the next target could be IBM’s semi fab.

Although IBM is viewed by many as an ultimate technology and computer company, it is not. IBM's core businesses are systems and engineering services, creation of solutions for the world’s most demanding requirements as well as researching technologies and concepts of the future business machines; IBM is a technology-based solutions company that functions at multiple economic and geopolitical levels worldwide. Although IBM spends vast amounts of money on researching materials and structures for future semiconductors, manufacturing of actual chips is neither profitable nor is the core competency of IBM. As a result, just like IBM got rid of its personal computer business back in 2004, the company may shortly decide to sell off its chip manufacturing facility.

“It is highly probable that IBM will consider a business alliance of some sort with Globalfoundries. […] With its fabrication facilities worldwide, and a foundation in complex processor design and manufacturing, Globalfoundries should be able to incorporate state-of-the-art support for IBM, drive business economies, and ensure growth. Globalfoundries could be an ideal outlet for IBM's IC fabrication business, enabling it to sell a business that has not met financial performance requirements for years, and still providing it the depth, scope, and resources needed to not only provide manufacturing security for IBM but also further ensuring success of its foundry business,” Boris Petrov, the principal analyst of Petrov Group and a former director of strategic marketing at Chartered Semiconductor, wrote in his column.

It is logical for IBM to sell off its semiconductor manufacturing business. The question is why would Globalfoundries acquire IBM's semiconductor manufacturing from IBM? The company is building a mega-fab that already costs over $4.2 billion in Luther Forest, New York and can expand this fab going forward. Acquiring an additional rather old fab in Burlington, New York, seems somewhat strange, especially considering that ATIC would like to build a semiconductor fab in Abu Dhabi, when local chip development startups take off. On the other hand, with the IBM fab, Globalfoundries will acquire IBM’s customers, who will eventually have to migrate to newer process technologies and fabs.

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