GloFo sues IBM over $2.5 billion damages claim

GloFo sues IBM over $2.5 billion damages claim

Business news |
By Peter Clarke

Globalfoundries sued IBM in New York on Monday and said IBM is claiming $2.5 billion in damages because of an alleged breach of contract to manufacture chips for IBM, according to multiple sources that reference New York court filings.

The legal spat between IBM and Globalfoundries comes as the foundry 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 $1.5 billion 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 14nm/12nm FinFET process away from pure digital and the end of 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 (see Globalfoundries sells ex-IBM fab to On Semi).

When Globalfoundries 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.

Globalfoundries says that IBM well understood that development of its process technology was hit by delays and the switch to Samsung had benefitted IBM as Globalfoundries decided to exit advanced process development, according to Bloomberg.

Globalfoundries is pure-play foundry chipmaker created in 2009 out of the manufacturing operations of Advanced Micro Devices with the almost immediate addition of Chartered Semiconductor in Singapore. The outfit was, and remains, majority owned by Mubadala, the sovereign wealth fund of the government of Abu Dhabi.

Related links and articles:

News articles:

Globalfoundries sells ex-IBM fab to On Semi

GloFo rethinks its future, drops 7nm FinFET

Globalfoundries’ IPO could value firm at $20 billion

Globalfoundries moves HQ to New York

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