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IBM leaves semiconductors – end of an era

IBM leaves semiconductors – end of an era
by Bill Jewell on 10-29-2014 at 2:00 am

 IBM last week agreed to transfer its semiconductor business to GlobalFoundries. GlobalFoundries will acquire wafer fabs in East Fishkill, New York and Essex Junction, Vermont; IBM’s commercial microelectronics business, which includes ASIC and foundry; over 10,000 IBM patents related to semiconductor manufacturing; and over 5000 fab and ASIC employees. GlobalFoundries will supply all IBM’s 22nm, 14nm and 10nm ICs for the next 10 years. IBM will take a $4.7 billion pre-tax charge to write down the assets of the semiconductor business and to cover paying GlobalFoundries $1.5 billion over the next three years. IBM will focus on fundamental semiconductor research for next generation computing.

IBM began semiconductor manufacturing for internal demand, which was huge when IBM was the world’s dominant computer company. Although exact numbers are not available, IBM was almost certainly the world’s largest semiconductor manufacturer for many years. As IBM became less dominant in computers, its semiconductor division had extra capacity. In 1993 IBM entered the merchant semiconductor market as a top 10 company with $2.5 billion in sales. IBM sold DRAMs (which were invented at IBM), ASICs and microprocessors. IBM withdrew from the DRAM business in 1999 but continued to sell ASICs and foundry services.

IBM leaving the semiconductor business is the end of an era. IBM was one of 34 original licensees of AT&T’s transistor patent in 1952, according to Bo Jojek in History of Semiconductor Engineering. We at Semiconductor Intelligence examined the original 34 licensees to see what became of them. The original 34 companies were from the U.S., U.K., West Germany and the Netherlands. Sony was the first Japanese company to license the AT&T patent, but was not one of the original 34.

It appears only 22 of the 34 companies developed and marketed transistor products. Of the 22 companies, most of them either went out of business or were absorbed by other companies in the 1950s and 1960s. 12 companies became meaningful suppliers in the semiconductor business. What happened to those 12 companies and to transistor inventor AT&T?

  • AT&T –semiconductor business was part of Lucent Technologies spinoff in 1996. Lucent spun off semiconductor businesss as Agere Systems in 2002. Agere merged with LSI Corp. in 2007. LSI was bought by Avago Technologies in 2014.
  • General Electric– sold its semiconductor business to Harris in 1988. Harris Semiconductor was spun off as Intersil in 1999.
  • IBM – divesting its semiconductor business to GlobalFoundries.
  • IT&T Corp. – divested semiconductor business over the years. Most of the remains of IT&T Semiconductor are now part of Vishay and Micronas.
  • L.M. Ericsson – sold most of its semiconductor business to Infineon in 2002. Ericsson exited the modem IC business in September 2014 (previously part of joint venture with STMicroelectronics).
  • Microwaves Associates –now M/A-Com, still makes microwave semiconductor devices.
  • Minneapolis Honeywell –now Honeywell, still makes semiconductor sensors.
  • N.V. Philips –spun off semiconductor business as NXP Semiconductors in 2006. NXP is still a top 20 semiconductor company.
  • National Cash Register Company –now NCR. Remains of semiconductor business now part of NetApp.
  • Raytheon Manufacturing –sold semiconductor business to Fairchild Semiconductor in 1997.
  • Siemens and Halske –now Siemens. Spun off its semiconductor business as Infineon Technologies in 1999. Infineon spun off its memory business in 2006 as Qimonda (now out of business).Infineon remains a top 20 semiconductor company.
  • Sprague Electric Company –sold semiconductor business to Sanken Electric in 1990.
  • Texas Instruments –divested most non-semiconductor businesses in the 1990s. Remains a top 10 semiconductor company.

Of AT&T and the original 34 patent licensees, only Texas Instruments remains as the same company and a significant player. If Siemens’s Infineon spinoff and Philips’ NXP spinoff are included, three of the original 34 licensees are still major semiconductor suppliers today. However compared to the changes in the semiconductor industry over the last 60 years, the changes in suppliers is not surprising. The semiconductor market first exceeded $1 billion in the mid-1960s and the major customers were mainframe computers makers (IBM), the U.S. military and the U.S. space program. Today the market is over $300 billion and the major applications include smartphones and tablet computers – unknown devices until about 20 years ago. The market has gone from single transistor devices in the 1950s to billions of transistors on an IC today.


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