IBM seeks buyers for semiconductor unit
07 Feb 2014
IBM Corp has hired Goldman Sachs to find buyers for its semiconductor business, the Financial Times yesterday reported, citing sources familiar with the matter.
The Armonk, New York-based technology giant IBM could also seek a partner to create a joint venture for its semiconductor operations, the report said.
The move comes just a few weeks after IBM agreed to sell its low-end server business to China's Lenovo Group for $2.3 billion. (See: Lenovo Group to buy IBM's server business for $2.3 billion)
A sale or joint venture of its semiconductor business would have to ensure that IBM continues to have access to advanced chip making facilities in order it gets a guaranteed supply of chips needed for its most advanced applications, an analyst told FT.
The most likely buyers could be from among Global Foundries, Taiwan Semiconductor Manufacturing Company (TSMC) Samsung and Intel, the report added.
The semiconductor market remains one of the most competitive in the world, and IBM has recently seen its profits shrink in this division.
Quoting an analyst at Sanford C. Bernstein, The Wall Street Journal yesterday reported that IBM's semiconductor division generated revenues of around $1.75 billion last year, but lost $130 million in pretax income, and forecasts revenue to fall to $1.45 billion in 2014, while losing another $130 million in pretax income.
Last year IBM enetered into a deal to sell its customer-care outsourcing business to Synnex Corp, for $505 million, taking $430 million in cash and $75 million in Synnex stock. (See: IBM to sell its customer-care outsourcing business to Synnex for $505 mn)
