Behind closed doors today, IBM Corp. merged its microprocessor and server groups into a new unit dubbed the Systems and Technology Group that could lead to more jobs and an expansion of Big Blue's 300mm fab.

Affective immediately, the move was said to be made solely to improve IBM's internal organization and chip processes, according to an IBM spokesman who stressed the importance of the MPU group to IBM's overall business.

"This is an indication that, unlike other vertically integrated companies that have recently cast off or in some way pushed aside their semiconductor units, we are embracing our semiconductor units," he said, with the ink still wet on Motorola's announced semiconductor business spin-off.

"We continue to invest heavily in research and development and state-of-the-art manufacturing facilities and look to establish and support the deep customer relations that [we have]. We believe there is an advantage that IBM gains from the combined strength of a system and semiconductor business, as opposed to the view of some of the other companies in the industry who have chosen to cast off the semiconductor side," the spokesman said.

The reorganization is just one of the changes at Big Blue, as the company has been slimming down excess businesses in the last two years. Besides beefing up its MPU group with heavy stress on its 300mm fab and foundry work in 2003 -- a year when the company also reabsorbed its storage unit into the systems group -- IBM sold its hard disk drive business to Hitachi in 2002, laying off much of the unit.

Today's consolidation, the spokesman said, will not see any of the total 30,000 employees head for the unemployment line. Nor will there be any cost reductions, according to the IBM official.

Among those keeping their jobs are Systems Group head Bill Zeitler and Technology Group leader John Kelly, who will continue on in their roles, reporting to CEO Sam Palmisano.

Indeed, there may be a need to add jobs, as IBM foreshadowed late last year with announced plans for 10,000 new positions, one analyst said. Richard Doherty, research director at Envisioneering Group, noted that IBM Research is still coming up with computer algorithms and such that may be part of the next Power 5 of Power 6, keeping its systems and semiconductor groups closely tied.

"As more and more algorithms get turned into silicon, IBM will do very well, particularly on a power side of things, to keep that structure with the same IBM brand on it and not have to go to another company," Doherty said. " It's optimization of jobs and not decimation. They are going to need -- and some IBM competitors are going to need -- all the people they can get in the future. One of the IBM embedded processors today is going to be at higher and higher demand. For a lot of the jobs that are going to simpler 16-bit systems, they are going to be going to Power embedded."

Today's decision may also see a need for more capacity. IBM filed paperwork with East Fishkill, N.Y., government for expansion of its 300mm fab there in Q4. The company has yet to comment on the filing, only to say that if it ever decides it needs a bigger factory it has started the ball in motion.

"We do believe this calendar year there will be announcements from existing IBM partners and new partners that are going to make sure that capacity gets pushed to its limit, and they will need more capacity in the 2005/2006 range," Doherty noted.

Even so, customers -- both internal IBM and external companies including Nvidia and Apple Computer -- are not expected to see a major change in their relationships with IBM or its technology.

"It's business as usually, as far as that goes," the IBM spokesman said. "There is just a tighter coupling within the internal organizations."

By: DocMemory
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