IBM to pay Abu Dhabi-backed Globalfoundries to take chip unit

IBM says it will pay Globalfoundries $1.5bn in cash over the next three years to take the chip operations off its hands
IBM to pay Abu Dhabi-backed Globalfoundries to take chip unit
By Reuters
Mon 20 Oct 2014 02:46 PM

IBM Corp said it would hive off its loss-making semiconductor unit to contract-chipmaker Globalfoundries Inc to focus on cloud computing, mobile and big data analytics.

IBM will pay Globalfoundries $1.5 billion in cash over the next three years to take the chip operations off its hands, the companies said in a statement on Monday.

IBM will take a related pre-tax charge of $4.7 billion in its third quarter.

Silicon Valley-based Globalfoundries said it would take over IBM's manufacturing operations in East Fishkill, New York and Essex Junction, Vermont, and offer jobs to substantially all IBM employees affected by the deal.

A team of semiconductor server group employees will remain with IBM.

Global Foundries is owned by the Mubadala Development Co, the Abu Dhabi government's investment fund.

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