The much anticipated chip fab transfer between IBM and GlobalFoundries is pushing through, but the complex deal has its share of regulatory twists that could take well into 2015 to conclude.

The deal is sweeter in several respects for GlobalFoundries than anticipated, but the foundry will have its hands full sorting out technical details of the implications for its roadmap. Just what impact the move might have for IBM's slumping Power Systems server business is still unclear. .

The news came as IBM came under pressure from "disappointing" third quarter results. Revenues fell 4 per cent from the same period last year, and IBM said it would not hit in 2015 a long held target of $20 in earnings per share. IBM's stock price initially dropped more than 7 per cent to $166 on the news.

Here's a snapshot of the proposed deal:

•IBM will take a $4.7 billion charge in its current quarter to represent the transfer of its fabs and about $1.3 billion in cash to GlobalFoundries.
•The two primary fabs had losses of about $700 million in the past 12 months.
•GF plans to make offers to employ virtually all the more than 5,000 IBM fab and ASIC design employees indentified in the sale.
•GF also gets ownership of more than 10,000 IBM semiconductor patents
•No layoffs or plant closures are anticipated by either company.
•GF gets an exclusive 10-year deal to supply all IBM's 22, 14, and 10nm chips.

Overall, the deal could expand by more than 10 per cent GlobalFoundries' current capacity, to produce more than 2 million wafers a year.

"It would appear that IBM gave in on both the price as well as the IP in order to get rid of the operations," said analyst Robert Maire in his Semiwatch newsletter. "In a way it's a bit of a sad ending for IBM's once-proud hardware technology, but times have changed, and the industry has long since moved on, and it took IBM way too long to wake up to that fact."

The deal involves IBM's East Fishkill, N.Y., fab that makes about 15,000 wafers a month mainly in 45 and 32nm silicon-on-insulator processes. The fab is also ramping the 22nm process used to make IBM's Power 8 processors and has some 14 nm technology in development for the follow-on generation.

It also involves IBM's Burlington, Vt., fab which makes 45,000 200mm wafers per month. The fab uses a wide variety of processes, including a 130/180nm RF SOI process for RF front-ends and switches used mainly in cell phones and a 90nm silicon germanium process, mainly for power chips used across a wide range of high-end applications including car radars and high-frequency radios and testers.

By: DocMemory
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