IBM Chip Unit Sale Would Send Tremor Through Industry

Peter Clarke, Electronics360
10 February 2014

The news that IBM's CEO Ginni Rometty is looking to sell off IBM's chip unit raises issues around IBM's Power processor architecture and numerous other chip companies that have stood on the shoulders of this giant's semiconductor R&D. These include most of the industry's chipmakers with the exception of Intel Corp. and Taiwan Semiconductor Manufacturing Co. Ltd.

The likes of Globalfoundries Inc., United Microelectronics Corp., SMIC, STMicroelectronics – and even the mighty Samsung – have all been involved in manufacturing process collaborations with IBM and IBM's exit is likely to at least lower morale there even if it does not have a direct impact on their immediate sales. With IBM not around it does imply that their cost of R&D in the medium- to long-term is going to go up. Unless one or more of them also withdraw from the market.

The move. reported in the Financial Times, is indicative of the lack of profitability in vertically integrated IC production, which has fostered the fabless-foundry business model. But it also begs the question who could pick up IBM's manufacturing in New York State or the burden of its R&D?

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