Enterprise Hardware

Is IBM Really Selling its Semiconductor Business?

Is IBM Really Selling its Semiconductor Business?
February 7, 2014 10:13AM

Bookmark and Share
One rumor suggests IBM would would sell the microelectronics division or sell the assets but maintain its chip design teams. That is a sensible scenario. The assets would have to be sold to a company that IBM felt comfortable doing business with because some firm is going to have to crank out those Power processors and mainframe engines.

Neustar, Inc. (NYSE: NSR) is a trusted, neutral provider of real-time information and analysis to the Internet, telecommunications, information services, financial services, retail, media and advertising sectors. Neustar applies its advanced, secure technologies in location, identification, and evaluation to help its customers promote and protect their businesses. More information is available at www.neustar.biz.

IBM is selling off more and more of its business. After selling its x86 server line to Lenovo, Big Blue is reportedly shopping its semiconductor business.

News reports suggest IBM has hired Goldman Sachs to search for potential suitors. The Financial Times noted the sale would be Big Blue’s most significant strategic move since it faced a financial crisis in the early 1990s. IBM could not immediately be reached for comment.

“It is a step away from their heritage,” Patrick Moorhead, an analyst at Moor Insights and Strategy, told the Financial Times. “This is probably their biggest strategic realignment for 20 years.”

A Fundamental Change

We caught up with Charles King, a principal analyst at Pund-IT, to get his take on the rumor. He told us selling the semiconductor business would be a fundamental change for IBM. He doesn’t think selling would mean IBM would stop building Power Systems or mainframe systems any time soon, but Big Blue is already a different company in 2014 than it was in 2013.

“One rumor suggests IBM would would sell the microelectronics division or sell the assets but maintain their chip design teams. That actually is a sensible scenario. If the assets were sold they would have to be sold to a company that IBM felt very comfortable doing business with because somebody is going to have to crank out those hundreds of thousands of Power processors and mainframe engines for them if they are not doing it themselves,” King said.

“The rumor makes sense in certain ways but it’s not like selling of an x86 server business. There’s a lot more at stake, frankly, both from the standpoint of the technologies involved and also from the standpoint of the importance of those technologies in IBM’s nearer and long-term future," he added.

Reviewing the Last Deal

In late January, IBM agreed to sell its x86 server business to Lenovo for $2.3 billion. This includes System x, BladeCenter and Flex System blade servers and switches, x86-based Flex integrated systems, NeXtScale and iDataPlex servers and associated software, blade networking and maintenance operations. IBM will retain its System z mainframes, Power Systems, Storage Systems, Power-based Flex servers, and PureApplication and PureData appliances.

IBM is clearly jockeying toward the future. The Lenovo agreement follows recent announcements by IBM that it will invest more than $1 billion in the new IBM Watson Group, and $1.2 billion to expand its global cloud computing footprint to 40 data centers worldwide in 15 countries across five continents.

“This divestiture allows IBM to focus on system and software innovations that bring new kinds of value to strategic areas of our business, such as cognitive computing, Big Data and cloud,” said Steve Mills, senior vice president and Group Executive, IBM Software and Systems of the x86 business line sale. “IBM has a proven record of innovation and transformation, which has enabled us to create solutions that are highly valued by our clients.”

Tell Us What You Think
Comment:

Name:



 Enterprise Hardware
1. Lenovo Still in Small Windows Tablets
2. Seagate Unveils Networked Drives
3. Another Day, Another IoT Consortium
4. Gartner Sees Tablets Up, PCs Down
5. Review: Tablets with Keyboard Covers




 Most Popular Articles
1. Experts Say Four Threats Put Internet Freedom at Risk
2. Review: Warming Up to Tablets with Keyboard Covers
3. Gartner Rates Security Solutions in Annual Magic Quadrant Report
4. Android SMS Worm Lets Bad Actors Cash In
5. Aerohive Helps Retailers Engage In-Store Customers

Have an informed opinion on this story?
Send a Letter to the Editor.
We want to know what you think.
Send us your Feedback.

 Related Topics  Latest News & Special Reports

  Lenovo Still in Small Windows Tablets
  How Chrome Eats Your Battery Life
  Cisco Woos More Devs with DevNet
  Investor Wants EMC To Spin Off VMware
  Schools Buy Million Chromebooks in Q2

 Technology Marketplace
Big Data
Unlock your enterprise data's potential. Learn how in the research report.
Are you getting everything you can out of your business data?
 
Business Intelligence
Get real-time, cloud-based information services with Neustar.
 
CIO Issues
Secure and retain skilled technology professionals. Learn how.
 
Cloud Computing
Are you getting everything you can out of your business data?
 
Data Storage
Unlock your enterprise data's potential. Learn how in the research report.
 
Enterprise Hardware
Protect your network with APC Smart-UPS battery backup
Cisco UCS Invicta Series flash memory systems
 
Enterprise I.T.
Register for an upcoming ISACA® certification exam today
Secure and retain skilled technology professionals. Learn how.
 
Enterprise Software
Unlock your enterprise data's potential. Learn how in the research report.
 
Hardware
Protect your network with APC Smart-UPS battery backup
Ferocious productivity. A fearless team of pros. Find Out More
Cisco UCS Invicta Series flash memory systems
 
Network Security
Protect your network with APC Smart-UPS battery backup
 
Small Business
Ferocious productivity. A fearless team of pros. Find Out More