Analysis: What's the future of IBM Micro?

 
SAN JOSE, Calif. -- IBM Corp.'s move last week to implement layoffs within its semiconductor unit follows a dramatic slump in sales, product setbacks and numerous false starts in the sector.

As reported, IBM slashed 1,200 jobs within its systems and chip units, in additional to separate layoffs in the company's information technology groups. The moves not only angered IBM's employees, but it also begged an important question: What will eventually happen to IBM's Microelectronics Group?

Over the years, especially during down cycles, there have been whispers that IBM could sell or divest its prized but costly semiconductor unit. The speculation about the chip unit is heating up again amid the current IC downturn, not to mention IBM's stated strategy to focus on software and services--and not hardware.

Some speculate that IBM will keep the chip unit. Others believe it could spin off the chip unit and go fabless. Some think it could merge the unit, reportedly with the Advanced Micro Device Inc.'s foundry spin-off. Or maybe Big Blue will sell its chip unit to Samsung Electronics Co. Ltd.

Even if it doesn't spin-off the chip unit, there is a distinct possibility that IBM may end up delaying its fab expansion plans due to the IC downturn. Its efforts to expand into the merchant chip markets could slide. And most are watching to see if IBM will ship its high-k/metal-gate technology by year's end, as previously promised by the company.

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