IBM Looking To Sell Its Semiconductor Business

jfruh writes "Having already gotten out of the low-end server market, IBM appears to be trying to get out of the chip business as well. The company currently manufactures Power Architecture chips for its own use and for other customers. Big Blue wants to sell off its manufacturing operations, but will continue to design its own chips."

Comments

That's a surprise move

[cold fjord]

I thought IBM was able to leverage their detailed knowledge of their semiconductor processes to squeeze every bit of performance they can out of their Power architecture designs, and even tweak the processes to aid them. I doubt they will have enough volume for another company to do much of that unless they are willing to pay.

Re:That's a surprise move

[fuzzyfuzzyfungus]

It also seems a bit weird because the merchant foundry business isn't exactly facing a worldwide shortage of fabless companies, or demand for their designs burned into silicon(and, unlike AMD, IBM isn't having its face held underwater and being allowed to flop around just enough to satisfy the FTC, so they presumably aren't facing an impossible capital crunch). I'd also assume that IBM would be better placed than many to grab the (probably low volume; but nice margin) Must Be Red, White, and Blue and More American Than Mom's Apple Pie fab jobs. They've got domestic facilities, and have been doing assorted DoD and fed work longer than most of us have been alive.

Have they recently acquired new executives that are hellbent on selling absolutely everything that isn't mainframes and $$$$$/hour consultants?

Re:That's a surprise move

[mlts]

I just don't get IBM's motive. In the past, they were a one stop shop for a business. Yes, expensive, but no matter what broke, be it software, hardware, or the application, the IBM CE either could fix, or could get someone on the line who would be able to deal with the problem.

Then they sold most everything.

Other than becoming a new EDS with mainframes, what is IBM going to gain by this long-term strategy? Each market they hand over is one that could end up a bonanza should a trend change in the IT world. Storage and SSD come to mind.

Going to just mainframes won't help much -- zSeries machines are still the best hardware out there, but not everyone needs Parallel Sysplex, and a lot of companies are moving to Facebook's model of running with a craptastic generic hardware stack, with all the redundancy in the backend application programming.

PS: #insert grumble about beta here.

What's left?

[MobyDisk]

I know of IBM as a:
- Desktop PC manufacturer
- Server manufacturer
- Chip manufacturer

If they don't have those 3 things any more, then what are they? To my knowledge, IBM has some of the best fabs in the world. It's amazing to me that this is not part of their core business. This is... wow... just wow.

that's what I was thinking too.

[Virtucon]

Sad really, IBM once stood for innovation and industry leadership. Now they're all about maximizing shareholder equity and other buzzwords that have nothing to do with being a leader. The board needs to fire most of the C level MBA shit-for-brains and hire some tech talent from within to re-motivate the company before it's too late.

I don't get it.

[ErichTheRed]

How is semiconductors not a core business for a company that still makes huge profits off mainframes and midranges?? Sure, keep design in house, but you'll lose the flexibility you have. Imagine your research division came up with an amazing new chip design they wanted to work on right away, but were told "Nope, it'll take 6 months to ramp up GlobalFoundries, TSMC, or whatever. Sorry."

The thing I really don't get (in general) is the way businesses feel like they can have no assets on their books and just run everything with a massive tower of multi-layer outsourcing. It doesn't make sense -- outsourcing something is never cheaper than doing it yourself. As soon as you do that ,you add in a layer of middlemen who need to get paid for doing a task which was previously cheap or "free with purchase of inhouse labor." It never works out. I guess I'll never be an MBA, because I don't get the accounting tricks that make a company appear profitable when they're wasting money on things they could do cheaper and better themselves.

For IBM's case, I do see what they're trying to do. Software is more profitable than hardware. But the problem is that IBM is/was a huge innovator in hardware and chips. They're one of the last US companies massive enough to support basic research that can improve those hardware innovations. IBM's software may be profitable, but I haven't seen anyone singing the praises of WebSphere or their Rational products lately. IBM also has a massive "services" division. I've had extremely good luck with the services people who service IBM hardware, but that's going away. So, we're left with the legendary crap outsourcing and offshoring stuff they do for large companies, and of course, "consulting." My experience with outsourced IT run by IBM is an ITIL nightmare of endless support tickets, revolving door engineers, meetings to plan meetings to plan the strategy for changes, etc.

It's kind of a shame if you ask me. I am just old enough to remember when IBM was as powerful as Microsoft was and as Apple is right now. They were able to command huge margins on everything they sold because it was backed up by a really good services team. People I know who worked for IBM "back in the day" tell me the corporate culture was weird, but employees never wanted for anything because they made so much money. (I also know people who worked for Sun and Digital who say the same thing.) In some ways, it would have been much nicer to work in the computer field during this "golden age of computing." I guess my main question is where the new hardware innovations will come from when you don't have a massive company and research group driving them.