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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."

37 of 195 comments (clear)

  1. That's a surprise move by cold+fjord · · Score: 4, Interesting

    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.

    --
    much of left-wing thought is a kind of playing with fire by people who don't even know that fire is hot - George Orwell
    1. Re:That's a surprise move by fuzzyfuzzyfungus · · Score: 4, Interesting

      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?

    2. Re:That's a surprise move by afidel · · Score: 5, Informative

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

      Yes, their previous CEO made a stupid goal of $20 operating EPS by 2015 and the new CEO seems to be hell bent on hitting that target, whether that's from an incentive program or ego talking I'm not sure.

      --
      There are 4 boxes to use in the defense of liberty: soap, ballot, jury, ammo. Use in that order. Starting now.
    3. Re:That's a surprise move by mlts · · Score: 4, Interesting

      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.

    4. Re:That's a surprise move by unixisc · · Score: 5, Insightful

      This is sad. I remember when IBM came out w/ some great innovations like the copper process. It's also disappointing to see even fewer, rather than more fabs. Yeah, I know that the costs are astronomical, but converting such a market into an Intel monopoly is a cause for concern

      Also, once that's gone, it will be the end of the road for Power as well: as it is, Freescale has all but abandoned it, the console guys have abandoned it and now it's IBM itself. An independent fab won't free up space for IBM's Power if there are more lucrative chips available - particularly in volume. Only reason SPARC is alive is really Fujitsu, and Itanic is almost dead. Power being gone would leave only MIPS for the embedded space, and Xeon/Opteron for the server space. I doubt that ARM8 will have a significant role there.

    5. Re:That's a surprise move by ebno-10db · · Score: 2

      maybe IBM is getting into the Patent Trolling business?

      They've been in that business for decades. I read one of the Sun founders talking about the shakedown they got from IBM around 30 years ago.

  2. Beta delenda est! by emmagsachs · · Score: 4, Insightful

    Nobody buys Playboy for the articles. They do it for the hot, nude women (sadly, sans grits). It just so happens that /. is exactly the same. No one reads /. for the articles. The articles were news two days ago. And no one reads /. for the summaries. The summaries are almost always wrong.

    Everyone reads /. for the comments. The comments are the /. equivalent of Playboy's naked chicks, with one crucial difference. Without the gentlemen at Playboy, there will be no naked chicks to look at. The service they provide is, for the most part, finding women that will agree to pose nude for pictures, which they most graciously distribute to their readers.

    But as for Slashdot -- the good people at Dice and their "editorial" team do diddly squat around here to generate content. The articles, old as they may be, are submitted by the users. The summaries, mistaken as they may be, are provided by the users, not by Timothy, Soulskill, et al. The comments, trollish as they may be, are written by the users.

    /. is of the users, by the users, for the users. The only people at Dice who deserve their paycheck are the IT people. The rest of you -- what is it that you do for our benefit? Why the hell do we need you clowns? Your music's bad and you should feel bad!

    Beta delenda est!

  3. What's left? by MobyDisk · · Score: 3, Interesting

    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.

    1. Re:What's left? by DougOtto · · Score: 4, Informative

      IBM is primarily a professional services company. They've been evolving into that for years.

      --
      Solving Unix problems since 1989...
    2. Re:What's left? by cold+fjord · · Score: 2

      They have a large consulting arm - IBM Global Services. (Not sure if that is still the name.)

      --
      much of left-wing thought is a kind of playing with fire by people who don't even know that fire is hot - George Orwell
    3. Re:What's left? by Third+Position · · Score: 5, Funny

      Kind of like watching fingers fall off of a leper, isn't it?

      --
      American Third Position
      Finally, a real choice!
    4. Re:What's left? by moogla · · Score: 2

      IBM's consulting services and design expertise on the big iron side is where all the money is. All the money in that they are the highest margin portions of the business and they get to set prices (very little meaningful competition, lots of opportunity for lockin)

      I'd love to explain it by way of analogy, but I don't want to stretch the concept of the fuck beta too thin, and car analogies are so last decade. Let's just say IBM wants to advise you on how you can escape from slashdot beta into their loving arms.

      --
      Black holes are where the Matrix raised SIGFPE
    5. Re:What's left? by schneidafunk · · Score: 2

      IBM stands for International Business Machines. They most certainly have evolved and will continue to do so, but their origins are quite fascinating and rooted in mechanics. Most importantly, the punch card system used for the 1900 census pretty much launched the success of IBM.

      --
      Some people die at 25 and aren't buried until 75. -Benjamin Franklin
    6. Re:What's left? by SuricouRaven · · Score: 2

      They are spending a huge amount of money on advancing Watson right now. The intention seems obvious to me: Advance the technology to the point where, even if not a true science-fictiony AI, it can be applied to solving a lot of practical business situations. Then sell Watson not as a product but as a service - the technology isn't going to be usable without some highly trained specialists to maintain it. Think call-center positions: A rack of servers running it could take the place of hundreds of front-line telephone operators, and anything Watson can't handle can still be passed through to the humans at second-line. Or specialized search engines - how many legal firms would pay for access to a service where one could ask the computer 'Analyse this brief and tell me of any previous similar cases?' IBM won't be running that, but they'll be supplying the technology to whoever does.

      Between the sale of manufacturing and their substantial R&D investment in Watson technology, it appears they are betting the company on being a support services provider in future.

    7. Re:What's left? by PolygamousRanchKid+ · · Score: 3, Funny

      IBM stands for International Business Machines.

      Actually, for the employees, IBM also stood for "I've Been Moved", as in, "transferred".

      Now I guess they have changed that to "IBS", as in, "I've Been Sold".

      --
      Schroedinger's Brexit: The UK is both in and out of the EU at the same time!
    8. Re:What's left? by marcosdumay · · Score: 2

      Oh, we know it. That's exactly why we active ignore IBM software.

    9. Re:What's left? by TheGratefulNet · · Score: 2

      from what I can tell, much (most?) of ibm, these days, is all outsourced labor. I have never, once, gotton a reply to a job posting from IBM. not even a thankyou letter for applying. and I've applied to some jobs that were a near copy of my resume/background. problem is: I'm US born and raised and therefore, not 'cheap labor' for them.

      IBM fired a lot of US folks a few yrs ago and sent all the jobs to india.

      IBM can go fuck themselves, for all I care, now.

      --

      --
      "It is now safe to switch off your computer."
    10. Re:What's left? by jedidiah · · Score: 2

      > They have a large consulting arm - IBM Global Services. (Not sure if that is still the name.)

      Yeah. It's full of 3rd party contractors.

      --
      A Pirate and a Puritan look the same on a balance sheet.
    11. Re:What's left? by ebno-10db · · Score: 3, Insightful

      IBM stands for International Business Machines.

      Close, but it's now India Business Machines.

    12. Re:What's left? by hendrips · · Score: 2

      According to Motley Fool, only 14% of IBM's sales are from hardware. And that 14% is including the x86 server business that they just sold. And yet, between 2002 and 2012, their sales grew 28% and their earnings per share grew a whopping 7x (total earnings grew much less because of huge share buybacks, but it's earnings per share that matter). IBM is a software and services company. They keep selling some "big iron" to promote lock-in for their software and services - essentially their hardware is the corporate version of Amazon's Kindle Fire. Cool stuff like Watson notwithstanding, IBM usually tends to dump hardware divisions around the time when that division can no longer provide any reliable software or services lock-in.

    13. Re:What's left? by Grishnakh · · Score: 2

      Rational? Are you kidding? ClearCase is an utter abomination.

  4. Re:Slashcott - don't visit this site from 2/10 - 2 by gtall · · Score: 5, Insightful

    Dice already said they need to redesign the beta. What more do you want from them, blood? So lay off with the immature "Waaaahhh...they aren't doing what I want them to."

  5. that's what I was thinking too. by Virtucon · · Score: 5, Interesting

    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.

    --
    Harrison's Postulate - "For every action there is an equal and opposite criticism"
  6. Re:America in decline ... by SuricouRaven · · Score: 2

    Manufacturing left America because China et al are cheaper. They are cheaper because they have minimal environmental regulations, a huge pool of labor willing to work for starvation wages, no workers' rights and no health-and-safety.

    The only way you're bringing manufacturing back is either blatant protectionism (which would be a diplomatic mess and likely result in retaliatory action in kind) or to beat China at their own game by returning to the days when many employees worked sixteen-hour days just to cover the rent, occasionally losing a hand in the machines was an acceptable risk and major cities were often covered by lethal levels of smog.

  7. Re:Slashcott - don't visit this site from 2/10 - 2 by StripedCow · · Score: 2, Insightful

    They should make beta opt-in, instead of opt-out. For ALL users.

    Plus, Dice thinks they can reach a broader audience.
    It isn't going to happen this way...

    We like slashdot because of the audience. Change the audience, and slashdot is over.

    --
    If Pandora's box is destined to be opened, *I* want to be the one to open it.
  8. I don't get it. by ErichTheRed · · Score: 3, Interesting

    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.

  9. Manufacturing is alive and well in the US by sjbe · · Score: 4, Insightful

    Manufacturing left America because China et al are cheaper

    Completely off topic and completely wrong. Manufacturing is very strong in America to the tune of about $2 Trillion per year and for every dollar spend in US manufacturing it results in an additional $1.32 to the economy. The US manufacturing sector by itself would be one of the ten largest economies in the world - approximately the same size as the entire GDP of Russia even without considering the multiplier effects. The US presently has about 1/5 of global manufacturing activity. Some products are not manufactured in the US anymore (mostly high labor content low margin products) but any claim that "manufacturing left America" is completely false.

    The only way you're bringing manufacturing back...

    Manufacturing never left. If you think it did then you have no idea what you are talking about.

    1. Re:Manufacturing is alive and well in the US by sjbe · · Score: 2

      However, like most big numbers that people throw around to impress, that means little because it's not expressed as a percentage, or a balance, or something meaningful.

      I did put it in context which you gleefully ignored. The three largest manufacturing "countries" in the world are the EU, the US and China with Japan a distant fourth. Together they make up somewhere over half of all global manufacturing and all three are within a few percentage points of each other. The claim is that the US does not manufacture anything anymore. That claim is demonstrably and ridiculously false and will remain so.

      The US has a large trade deficit in manufactured goods, and raw materials.

      A fact around which you have put no context whatsoever. You (wrongly) accuse me of not putting the size of the US manufacturing sector in context and then turn around and then do exactly what you are accusing me of. The effects of trade deficits are complicated and not necessarily bad.

      More sophisticated industries are where we shine, but the "let's move it to China" trend keeps moving up the food chain.

      Of course they do, just like Japan did some years ago. And as China's economy grows they are having to pay their workers more and industries that moved to China for cheap labor become less competitive. I run a manufacturing company and I see this first hand. The US will eventually have to compete with China on more sophisticated products the same as it does with Germany and Japan and others. This is normal.

  10. Next IBM press release... by chiller2 · · Score: 3, Funny

    01 Apr 2014: IBM (NYSE:IBM) International Business Machines Corporation (IBM) has changed back to it's original name, Computing-Tabulating-Recording Company (CTR) and will be selling off all post 1930 technology units to focus on it's core business of dial recorders, electric tabulating machines and time clocks.

    --
    --- Commission free trading & free stock up to $500 - use http://share.robinhood.com/kelvinp6 :)
  11. Actually because your hate beta by future+assassin · · Score: 4, Insightful

    posts are makes it annoying to read here in the last few days its gonna be quite nice to not see you here for 7 days.

    --
    by TheSpoom (715771) Uncaring Linux user here. I have nothing to add to this but please continue. *munches popcorn*
  12. Re:outsource THIS, beeotches! by djupedal · · Score: 2

    But will 1000 Watsons chained together and tossed into the ocean be as easily defined as a "good start" ..?

  13. Re:Slashcott - don't visit this site from 2/10 - 2 by gtall · · Score: 2

    " We have work to do on four big areas: feature parity (especially for commenting); the overall UI, especially in terms of information density and headline scanning; plain old bugs; and, lastly, the need for a better framework for communicating about the How and the Why of this process. "

    What is it about feature parity is it that you do not get? At least give them credit for trying. There is another way for Slashdot to die, it could die through doing the same old same old for the same old visitors.

    And for a group of people who claim to be the voice of the industry in the trenches, a lot of carping seems to ignore plain business sense. If this site doesn't hold its own in a marketplace, it will go away just like every other product that fails to capture a decent return. You might not like putting it in those terms but you know it's true. Sites rarely exist for the mere enjoyment of its visitors. In the end, someone has to pay for it. The Slashdot crowd is the same crowd that will crucify government waste along the lines of, there's too few served to justify the expense.

  14. Is this the homeopathic theory of business? by khelms · · Score: 3, Funny

    Sell all your product lines in order to raise profits to the maximum?

  15. Re:Slashcott - don't visit this site from 2/10 - 2 by danbert8 · · Score: 2

    But Miata is the answer to everything! Just ask Jalopnik, who like Slashdot is owned by idiots (Gawker in this case) that insist on repeatedly pissing off their users by changing the site layout and commenting system.

    --
    Yes it's an anecdote! Were you expecting original research in a Slashdot comment?
  16. Re:But wait, there's more by ebno-10db · · Score: 3, Informative

    IBM knew precisely what Hollerith was doing

    Hollerith wasn't involved in that - he died in 1929. Otherwise you're spot on. Hollerith worked on punch cards and tabulating machines, and his stuff was used in the 1890 US census. The Hollerith code bore his name though, and that's what was tattooed on death camp prisoners.

  17. Anybody remember Digital Equipment Corporation? by DavidSpencer · · Score: 2

    DEC used to make everything they sold: the chips, drives, displays, circuit boards, software, you name it. Eventually, for the sake of raising profits, they sold it all off part by part. Then they were absorbed by Compaq, which in turn was absorbed by HP. Today they're nothing but a memory. So who will ultimately buy IBM and when will they do it? It's now just a matter of time...

  18. Re:America in decline ... by GlennC · · Score: 2

    to beat China at their own game by returning to the days when many employees worked sixteen-hour days just to cover the rent, occasionally losing a hand in the machines was an acceptable risk and major cities were often covered by lethal levels of smog.

    In other words, the Republican Party's economic plan.

    ...and by the way, I don't like the new Slashdot Beta layout either.

    --
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