GlobalFoundries Asks Court to Reject IBM Lawsuit

Article By : George Leopold

IBM allegations come as GlobalFoundries is reportedly preparing an IPO.

GlobalFoundries is seeking a court ruling dismissing IBM’s claim that the chip maker violated a manufacturing agreement with the former owner of its fabs.

GlobalFoundries acquired IBM’s semiconductor fabs in 2014. According to reports and a court filing, IBM has accused the Abu Dhabi-owned chip maker of failing to comply with the terms of a manufacturing contract. IBM is seeking $2.5 billion in damages.

IBM paid GlobalFoundries $1.5 billion in 2014 to take ownership of its fab operations. In 2018, IBM abandoned efforts to manufacture advanced chips, turning instead to Samsung Electronics as its foundry.

Since then, GlobalFoundries alleged in a court filing on Monday (June 8), IBM “went silent for nearly two-and-a-half years.” In April, IBM asserted in a letter to GlobalFoundries that it was in violation of its contract, according to the filing with a New York state court.

In a statement to the Reuters news agency, IBM said it “contributed $1.5 billion to GlobalFoundries to supply the next generation of chips, and GlobalFoundries utterly abandoned IBM as soon as the final payment was received and sold off assets from the deal for its own enrichment.”

Bloomberg reported that the IBM lawsuit surfaced as GlobalFoundries prepares an initial public offering that could value the company at about $30 billion.

“This action arises out of what seems to be a misguided and ill-conceived effort by IBM’s law department to try to extract an outlandish payment,” GlobalFoundries said its complaint.

This article was originally published on EE Times.

George Leopold has written about science and technology from Washington, D.C., since 1986. Besides EE Times, Leopold’s work has appeared in The New York Times, New Scientist, and other publications. He resides in Reston, Va.

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