GlobalFoundries IBM Deal to Close July 1st!

Probably one of the most awaited semiconductor events is coming next week if the Poughkeepsie Journal is correct, which from what I’m told by my Albany friends, they are. The official announcement was made last October using the slide deck which can be found HERE. It was originally thought that the approval process would take a year so someone must have really pushed this one through.

ARMONK, N.Y., and SANTA CLARA, Calif., October 20, 2014: IBM (NYSE: IBM) and GLOBALFOUNDRIES today announced that they have signed a Definitive Agreement under which GLOBALFOUNDRIES plans to acquire IBM’s global commercial semiconductor technology business, including intellectual property, world-class technologists and technologies related to IBM Microelectronics, subject to completion of applicable regulatory reviews. GLOBALFOUNDRIES will also become IBM’s exclusive server processor semiconductor technology provider for 22 nanometer (nm), 14nm and 10nm semiconductors for the next 10 years.

Given the latest semiconductor acquisition spree this may not seem like a big deal but I think it is by far the most interesting one we will ever see. Some say this is an exit strategy with Samsung being the ultimate suitor. Others say it is a Greek tragedy in the making. Time will tell but personally I think it is a brilliant move in what will prove to be one of the more interesting chess games our industry has ever seen, absolutely.

Paul McLellan and I spent quite a bit of time on this from both the GF and IBM side of things. Here is a quick summary of the benefits we see for this acquisition:

• The IBM ASIC business is exactly what GF needed to get into the system houses
• The IBM IP portfolio is exactly what GF needed to differentiate in the fabless semiconductor ecosystem
• The IBM talent (5,000+ employees) is exactly what GF needed to create an East Coast semiconductor dynasty
• The IBM patents (10,000+) is exactly what GF needed to secure their semiconductor legacy
• The IBM acquisition is exactly what GF needed to secure a nice investor exit (IPO)
• Reinforces GlobalFoundries’ long-term commitment to manufacturing and technology leadership
• Provides R&D expertise to give a path to 10nm and beyond
• Expands segment growth in RF and ASIC
• Becomes IBM’s sole source foundry partner
• Gives them strategic relationships with top OEM industry suppliers

“This acquisition solidifies GLOBALFOUNDRIES’ leadership position in semiconductor technology development and manufacturing,” said Dr. Sanjay Jha, CEO, GLOBALFOUNDRIES. “We can now offer our customers a broader range of differentiated leading-edge 3D transistor and RF technologies, and we will also improve our design ecosystem to accelerate time-to-revenue for our customers. This acquisition further strengthens advanced manufacturing in the United States, and builds on established relationships in New York and Vermont.”

“The Agreement expands our longstanding collaboration, which began when GLOBALFOUNDRIES was created in 2009, and reflects our confidence in GLOBALFOUNDRIES’ capability,” said IBM Senior Vice President & Director of Research Dr. John E. Kelly III. “This acquisition enables IBM to focus on fundamental semiconductor and material science research, development capabilities and expertise in high-value systems, with GLOBALFOUNDRIES’ leadership in advanced technology manufacturing at scale and commitment to delivering future semiconductor technologies. We are grateful for the leadership and investments by the states of New York and Vermont in supporting the semiconductor industry.”

IBM, GlobalFoundries deal to close July 1; new look for tech