Globalfoundries to Take Over IBM's Manufacturing Capacity Rumors

From X-bit Labs: The rumors regarding possible acquisition of IBM's contract semiconductor manufacturing divisions have just resurrected. This time it came out from an additional comment to a Future Horizons. Perhaps, it makes a lot of sense. Or may at all not.

"We assume GlobalFoundries will purchase IBM’s semiconductor division and that Hynix/Micron will buy up the remaining smaller memory firms," said an analysts from Future Horizons research company in an additional comment to the call for the European Union to fund transition to 450-mm wafer processing in Europe.

450mm fabs cost $10 billion to build. Meanwhile, many chips nowadays become commodity products. Moreover, the margins of the foundry businesses are shrinking, which is why the contract semiconductor business make a great sense for Abu Dhabi, which is looking forward for long-term investments. For Europe in general, with the exception of countries like the Russian Federation (which budget is plagued by Vladimir Putin's military ambitions amid necessity for high oil and gas prices, which is why no investments into leading-edge manufacturing will be made while this president keeps office) and Germany (which needs to keep high-tech manufacturing at home, but does not want to support companies, yet it has finances to do so) long term investments are unlikely to be made by the governments despite of obvious necessity. Given the situation, it hardly makes sense for European private groups to help to invest into semiconductor manufacturing facilities due to lack of spare cash.

In the long run, commoditization will happen to complex chips, such as Qualcomm Snapdragon or Nvidia Tegra; hence, the margins in the foundry business will drop. Historically, IBM has got rid of all commodity/low-margin businesses. As a result, in 450mm world, IBM may not be interested in doing this business in the long-term, but may enter the market of very [relatively] high-scale 450mm manufacturing as one of a few 450mm contract makers, enjoy the situation for several years (so to get part of the investments back), and then sell the business off to its partner, Globalfoundries.

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