Giant Tech Company IBM agrees to pay $1.5 billion to Globalfoundries Inc. to jettison a chip-manufacturing unit off IBM.
IBM announces yesterday that they will make a big business announcement today and it seems this is it as confirmed by two people who have knowledge on the matter but preferred to remain anonymous.
In addition to the $1.5 billion, IBM was also set to receive $200 million worth of assets, which totals the net value of the deal to $1.3 billion.
The chipmaking unit drags the earnings of the company, which has been the reason why Ginni Rometty, IBM CEO, decided to axe it. Abu Dhabi based Globalfoundries will take on the said unit and tap the expertise of its engineers.
For 10 years, Globalfoundries will supply the tech company with power processors as an exchange for an access on the intellectual property of IBM. This will allow Globalfoundries to access the chipmaking technology. It will also guarantee IBM that they will get the supply of chips they needed for their systems.
The $1.5 will be paid by the giant tech company in three years.
Other than this sweeping move, IBM will also reveal in their announcements today their third quarter sales.