GlobalFoundries and IBM in $2.5bn legal fight

GlobalFoundries and IBM in $2.5bn legal fight

Business news |
By Nick Flaherty

Globalfoundries is suing IBM in New York, saying IBM is claiming $2.5 billion in damages because of an alleged breach of contract. The deal was to manufacture chips for IBM, according to multiple sources that reference New York court filings.

The legal battle comes as GlobalFoundries is preparing for an initial public offering of shares that could value the chipmaker at between $20 billion and $30 billion.

The dispute goes back to 2014 when IBM wanted to exit chip manufacturing itself and chose Globalfoundries as a partner to enable that. Globalfoundries agreed to supply Power processors as part of a deal that included access to IBM manufacturing process intellectual property.

GlobalFoundries was paid $1.5bn in 2014 to buy assets of IBM Microelectronics from IBM, including a 300mm wafer fab at East Fishkill and a 200mm facility at Essex Junction, Vermont. However, in 2018 Globalfoundries announced it was retuning its 14nm/12nm FinFET process away from pure digital and ending development of its 7nm FinFET manufacturing process. In April 2019 Globalfoundries announced the sale of the East Fishkill wafer fab to On Semi for $430 million.

When GF quit advanced manufacturing process development in 2018 IBM turned to Samsung to act as a source for advanced chips.

“IBM contributed $1.5 billion to Globalfoundries to supply the next generation of chips, and Globalfoundries utterly abandoned IBM as soon as the final payment was received and sold off assets from the deal for its own enrichment,” Reuters quoted IBM saying in a statement.

The foundry says that IBM well understood that development of its process technology was hit by delays and the switch to Samsung had benefitted IBM, according to Bloomberg.

GlobalFoundries was created in 2009 out of the manufacturing operations of Advanced Micro Devices as a pure foundry with the almost immediate addition of Chartered Semiconductor in Singapore. The company was, and remains, majority owned by Mubadala, the sovereign wealth fund of the government of Abu Dhabi.

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