IBM to pay Globalfoundries $1.5 billion to offload its chip business

Earlier, IBM put out a press release that it will be making a big announcement tomorrow morning before its quarterly earnings call, and it looks like the announcement is that it’s unloading an unprofitable chip unit. According Bloomberg, IBM will announce tomorrow that it’s paying Globalfoundries $1.5 billion over three years to take its chip business off its hands. IBM will also receive $200 million in assets, for a net transaction of $1.3 billion, the report says.

International Business Machines Corp. (IBM) agreed to pay Globalfoundries Inc. $1.5 billion to take an unprofitable chip-manufacturing unit off its hands, according to two people with knowledge of the matter. IBM will also receive $200 million worth of assets, making the net value of the deal $1.3 billion, said the people who asked not to be identified because the agreement is private. The companies plan to announce the deal today, the people said. IBM put out a statement yesterday saying it planned to make a “major business announcement” today. After months of on-again, off-again talks, IBM Chief Executive Officer Ginni Rometty finally struck a deal to jettison the chipmaking unit, which has been a drag on earnings. Globalfoundries, owned by an investment arm of the government of Abu Dhabi, is taking on the unit to tap the expertise of its engineers in the fundamentals of semiconductor design and manufacturing.