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NO SALE: IBM won't cash in its chips with GlobalFoundries after all

Chip fab firm wanted IBM's brains but thought its facilities had 'little or no value' – report

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IBM's hopes of unloading its loss-making semiconductor division to GlobalFoundries have reportedly been dashed, with GlobalFoundries refusing to budge on price.

Word that Big Blue was planning to sell off its chips business first surfaced in February, when the company retained investment bankers Goldman Sachs to help it put a value on the division.

GlobalFoundries – which was formerly AMD's chip-fabbing wing before it was sold to an investment arm of the government of Abu Dhabi in 2008 – has long been considered a frontrunner for the sale, owing to its close ties to IBM. The company has been baking chips for Big Blue at its Fab 8 facility in upstate New York since January 2012.

Recent developments have added fuel to speculation that IBM and GlobalFoundries were close to a deal, too. Earlier this month, the chip-baker brought Henry DiMarco on board as VP of site construction and facilities. DiMarco, a longtime IBM employee, was previously in charge of designing, building, and running IBM's 300mm fab in East Fishkill, NY.

Whatever common ground the two companies may have, however, it now seems GlobalFoundries won't be snapping up IBM's chip business after all. Bloomberg reports that talks of a sale have broken down, citing the omnipresent "people with knowledge of the matter."

According to those anonymous sources, GlobalFoundries was really only interested in acquiring IBM's patents and chip engineers. It was less keen on paying a premium for the company's aging manufacturing facilities, which it reportedly saw as having "little or no value."

It's not immediately clear whether IBM will continue to pursue options for selling off its chips unit. Neither it nor GlobalFoundries would comment on the Bloomberg report.

But even if it does get rid of its chip-baking albatross, IBM shows no signs of getting out of the semiconductor business altogether. Earlier this month, CEO Ginni Rometty committed to spending $3bn on chip R&D over the next five years, with the aim of shrinking transistor gates down to 7nm using every technique in the cutting-edge toolbox, from silicon photonics to carbon nanotubes and beyond.

Whether it will continue to fab those next-gen chips in its own facilities or offload the costly manufacturing stages to someone else, however, remains to be seen. ®

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