GlobalFoundries and IBM have settled their long-simmering litigation related to a $1.5 billion manufacturing and technology transfer deal the two companies struck more than a decade ago.

The fallout from the 2015 transaction, which resulted in GlobalFoundries acquiring two of IBM’s computer chip factories and a 10-year manufacturing agreement for GlobalFoundries to make IBM’s chips, led to the two companies essentially severing ties and suing one another over various aspects of the deal that allegedly went wrong.

Chief among IBM’s complaints was GlobalFoundries' decision several years later to abandon its plans to adopt extreme ultraviolet lithography needed to make the cutting-edge chips that IBM designs.

GlobalFoundries pulled back from EUV as part of a strategy decision to focus its manufacturing on more prevalent chips used in automobiles, wireless infrastructure and other devices that do not require the ultra-processing speeds required for high-end chips.

The strategy, developed by GlobalFoundries' CEO Thomas Caulfield, helped to make GlobalFoundries profitable. EUV lithography machines, which print the atomic-level designs on silicon wafers to make chips, can cost anywhere between $250 million and $400 million each and require tens of millions of dollars in research costs to optimize.

However, according to IBM, the move essentially prevented GlobalFoundries from making the high-end chips that IBM needed for its commercial computer servers that are used in data centers and supercomputers. IBM has traditionally assembled its servers in upstate Poughkeepsie.

EUV lithography is the most expensive and important technology in chipmaking. Only one company in the world, ASML of the Netherlands, makes EUV machines, which use special mirrors and lasers to imprint microscopic designs for the most advanced chips. Under the deal, GlobalFoundries was supposed to move from making chips with 14 nanometer features to those with just 7 nanometer features. IBM has since moved on to designing chips with 2 nanometer features, the smallest in the industry.

The 2015 transaction, which was first announced in 2014, also included a 10-year contract for GlobalFoundries to make IBM’s chips. As a result of GlobalFoundries' change in strategy, IBM ended up turning to Samsung to manufacture its chips. Samsung, based in South Korea, has its own foundry division that has invested heavily in EUV lithography machines.

IBM sued GlobalFoundries in 2021, seeking $2.5 billion in a civil lawsuit filed in state court. GlobalFoundries also sued IBM.

GlobalFoundries is headquartered in Saratoga County. Its Fab 8 manufacturing campus straddles the towns of Malta and Stillwater. About 3,000 people work at the site.

IBM is the largest tenant at Albany NanoTech and is based in Westchester County. IBM also has strong ties with Rensselaer Polytechnic Institute in Troy, where IBM has one of its quantum computers on campus.

The two companies, which are keeping the details of the legal settlement secret, said in a joint news release that they have “resolved all litigation matters, inclusive of breach of contract, trade secrets and intellectual property claims between the two companies.”

Joint news releases are rare when two companies resolve lawsuits. The two companies also went out of their way to say that the two sides were both happy with the outcome.

“This settlement marks the end of an ongoing legal dispute and allows the companies to explore new opportunities for collaboration in areas of mutual interest,” the joint release states.

The details of the settlement are confidential and both parties have expressed satisfaction with the outcome.

“We are pleased to have reached a positive resolution with IBM, and we look forward to new opportunities to build upon our long-standing partnership to further strengthen the semiconductor industry,” Caulfield said in a prepared statement. Caulfield, like many top semiconductor industry executives, is also an IBM alum, having worked at the company previously.

“Resolving these disputes is a significant step forward for our companies and will allow us to both focus on future innovations that will benefit our organizations and customers,” IBM CEO Arvind Krishna said in a statement.

The announcement comes as New York state is awash in billions of dollars in federal funding from the $52 billion CHIPS and Science Act for the computer chip industry that is designed to “reshore” the U.S. chip industry’s chip manufacturing capabilities. GlobalFoundries is a “foundry” that makes chips for other companies that use their own designs.

About 20 years ago, chip companies began selling off their factories or closing them in the U.S. and having their designs made in Asia. The CHIPS act is designed to bring that manufacturing back to the U.S. in the face of China’s military threats and trade war with the U.S.

By: DocMemory
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