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IBM reaches pivotal moment in chip fabrication

Posted: 25 Jun 2014  Print Version  Bookmark and Share

Keywords:chip fab  IBM  GlobalFoundries 

In this first of a three-part series EE Times talks to analysts and current and former IBM employees about the company's future as a chipmaker.

IBM ought to withdraw from the chip-making business and sell its semiconductor plant, say a handful of analysts and current and former IBM employees, pointing to GlobalFoundries as the best potential buyer.

A senior executive in charge of the IBM group told us chip operations remain strategic and—at least for the moment—intact. He would not, however, comment directly on reports in February that the company is exploring a sale of one or both of its fabs.

While IBM's role as a chipmaker is debated inside and outside the company, all sides agree on one thing: For decades the company has been a leader in semiconductors, developing technologies that gave it an edge and pushed the industry forward.

IBM bolsters RF foundry with SOI, SiGe
The chipmaker launched additional processes for fabricating RF chips including a 130nm/180nm hybrid SOI and 90nm SiGe BiCMOS, both run in Intel's Burlington fab, which is reportedly up for sale.

Despite its technical prowess, IBM should go fabless, some argue, claiming the company has under-invested in its two fabs for several years. The chip business hasn't fit IBM's corporate business model for years, they say.

IBM's Power server business has served as one of the main motivations for making chips, but it hit a slump last year that the company has admitted it cannot reverse. The decline came on the heels of the loss to AMD of its high-volume, high-margin business making ASICs for videogame consoles.

On a human level, employees in IBM's chip division say they are shell-shocked by multiple rounds of layoffs. They see a sale as a possible resolution after living under a cloud for years.

"Layoffs came in waves and there are rumours they are still coming—I lived through so many of them," says a former IBMer laid off in July 2013. "It's a tough environment where people are always nervous about what's coming next. It's not fun anymore."

Some decide to leave

A current employee recalls how one colleague used a forced unpaid week off in 2013 to work on his resumé and ultimately left for Qualcomm. "We've lost a lot of people to Qualcomm," says the IBM veteran who asked not to be named.

A former employee reports some IBMers have gone to support Intel's growing foundry business; another said many former colleagues are now at AMD and Freescale. GlobalFoundries recently said it has hired on a temporary basis "200 experienced engineers and managers to support its current Fab 8 ramp" in upstate New York from May to December 2014.

Another former employee laid off in July shared two common complaints: IBM has not spent the money to keep its fabs up to date; and it has done a poor job communicating its plans to staff.

"They really are not transparent down to the trenches as they used to be," he told us. The Burlington fab "has been treated as a cash cow with minimal investments and maximal extraction."

"They just haven't invested [in the fabs] to the point where now they have to sell them or exit the business," another former employee says.

The bigger problem with morale is that IBM is out of step with the times, another former employee argues.


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