Informing the IBM Community

IBM’s processor sell-off may have stalled


Deal Vs No Deal Switch

IBM may not be selling its processor businesses to GlobalFoundries after all, according to a Bloomberg report.

On Friday, the American news agency posted a story that said IBM had walked away from the negotiating table because GlobalFoundries’ offer for its chip operation was too small. Neither party had been willing to comment either way.

In February, IBM gave Goldman Sachs the job of exploring possibilities for the division. Last month, another Bloomberg article indicated that a deal was close. Earlier this month, GlobalFoundries hired Henry DiMarco, previously in charge of IBM’s 300mm fab in East Fishkill, New York state.

Two weeks ago, PowerWire picked up a story from The Albany Business Journal, a publication with a strong interest as both firms have local production plants, which said the deal was imminent.

GlobalFoundries was spun out of AMD in 2009 and is owned by the Emirate of Abu Dhabi. It was seen by many as the perfect purchaser for Big Blue’s Power processor-making unit. Its New York plant already makes chips for IBM.

However, according to Bloomberg, this may itself be part of the problem if the deal is indeed off. It quoted anonymous sources as saying that GlobalFoundries placed little or no value on IBM’s factories because they are “too old”. What it wanted was IBM’s chip engineers and intellectual property and then to act as IBM’s prime processor supplier.

A number of commentators have remarked that GlobalFoundries’ offer may just be a haggling position. But there are other aspects of the story that beg a few questions.

Firstly, can the manufacturing facilities that produce 22nm silicon-on-insulator processors like the Power8 really be so antiquated that they’re not worth buying? Certainly, if this were a sticking point, it is unlikely sentimentality about the workforce at the plants involved would be an issue.

Secondly, if talks have floundered, what effect did IBM’s announcement earlier this month that it was to invest $3bn on processor R&D over the next five years have on matters? With talk of getting down to 7nm designs, carbon nanotubes and silicon photonics, was this Big Blue offloading its current tech like a snake shedding its skin before moving onto the next big thing? If not, what was GlobalFoundries’ cut of all this munificence going to be?

Leaving apart from the issue of where the deal would leave the OpenPOWER Consortium, there is a third question for Power Systems people of whatever stripe. If, after much behind-the scenes toing and froing, IBM does sell its processor business and then follows this up with a sale of its remaining server operation (apart from, presumably, its mainframes), our future will change.

While the OS and software may still come from Big Blue, Power9 machines may feature third-party processors and be made by an entirely different hardware manufacturer. If nothing else, this three-way scenario presents an interesting challenge for the current IBM i and AIX channels.

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