IBM: Please, take our chip unit. We'll give you $1.5 billion

Big Blue is going to become slightly less Big and Blue by paying Global Foundries $1.5bn to take on its chip-making business, according to multiple media reports. The giant's retreat from hardware continues following the transfer of the X86 server business to Lenovo. Bloomberg and others reported an IBM statement saying it is …

[John Savard]

Puzzling

To a layperson, this certainly sounds puzzling. After all, the chip-making unit has nonzero asset value.

But IBM is getting something for its $1.5 billion. Global Foundries is promising not to cut it up and sell it for scrap, but instead to continue running it despite it losing money, and even make chips for IBM with it.

[Anonymous Coward]

Re: Puzzling

IBM probably has contracts for stuff like mainframes that require components to be made in the US.

[Billl]

IBM is a follower...

IBM is just following Sun/Oracle's lead here. I leave out HP in this discussion as they've given up on the Chip innovation front, entirely relying on partners... Chips are not profitable, except for those that can monetize slave labor or those that own 90% of their market -- often both.

There is definitely value to be had by creating customized chips for your particular need, but the general CPU market is dead except for a very few.

IBM has been ahead of the curve in many cases by getting rid of profitable product groups before they fell off the cliff (PC's, Switches, Disks, etc), but they missed the boat on this one by about 10 years.

Warning... the above opinions are those of their author, and not necessarily based upon fact, nor any special knowledge of the company in question. Numbers may be over or under inflated, and are used relatively arbitrarily.