IBM said to be considering sale of microelectronics business
1 min read
When the news broke that Lenovo was buying IBM's x86 based server business, I wondered whether the writing was on the wall for its microelectronics business. It appears to be so, with investment bank Goldman Sachs retained to investigate whether there is a potential buyer or someone prepared to get involved in a joint venture.
The $64,000 question – a figure which would need to be increased significantly in this instance – is who might want to buy the unit? TSMC doesn't, Globalfoundries might, but it's unlikely. Who might want to enter a joint venture? The answers are similar. Private equity? Don't hold your breath.
IBM's microelectronics business is the natural outlet for work undertaken in its extensive R&D operation. Some of that work finds an outlet in the Common Platform Alliance, where IBM, Samsung and Globalfoundries are developing 14nm FinFET technology. But there's also the Technology Development Alliance, which brings in a wider range of companies, including ST and Infineon. These are complex arrangements which would take some unpicking.
In some respects, IBM appears to have painted itself into a corner; its ambitions to develop the software and services element of its business appear to have pushed the hardware element into the shadows. With some 80% of its revenues now coming from software and services, does IBM's management see microelectronics as something of an extravagence? The unit is said to be losing money and appears now to be very much the poor relation. The answer? Put up the 'for sale' sign.
Whether anyone responds remains to be seen.
