October 20, 2014

Tech giant IBM announces plans to hand all of its "chips" over to Malta-based GlobalFoundries. Jon Dougherty explains what this decision means for the Capital Region.

It's making headlines around the world, especially since the news came out the same day IBM announced a drop in revenues.

IBM will pay GlobalFoundries more than $1 billion to assume control of a semiconductor division that has not made IBM any money.

Via teleconference, officials at IBM and GlobalFoundries called the agreement a huge win for the Northeast.

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"This is a global deal, but so much of this deal is here in New York state," said the senior vice president and director of IBM research. Dr. John Kelly III.

The deal would make GlobalFoundries the exclusive manufacturer of IBM semiconductors for the next 10 years, small disks that go into phones, computers, and other electronic devices.

GlobalFoundries will also get $1.5 billion over three years and will take over IBM's operations and facilities in East Fishkill, New York and Essex Junction, Vermont.

"We are investing around $10 billion between 2014 and 2015 and we produce a little over two million wafers a year, but this combination of at scale manufacturing with leading edge technologies has the capability of making us a world class, semiconductor technology company," said GlobalFoundries CEO Dr. Sanja Jha.

The deal is on top of a $3 billion investment over five years IBM is making for semiconductor technology research through a partnership with GlobalFoundries and the College of Nanoscale Science and Engineering in Albany, where Dr. Alain Kaloyeros said the whole region benefits.

"It means additional expansion, additional investments and additional jobs in Malta, Fishkill, and especially in Albany so we're very excited about the future," said SUNY CSNE CEO Dr. Alain Kaloyero

About 5,000 IBM employees from the two facilities will become GlobalFoundries employees.

GlobalFoundries said it has no plans of closing either location, and basically all IBM employees will be offered jobs with them, but some could be asked to move to its Saratoga County plant.

"We will ask some of the employees to consider moving to Malta, but that fraction is very small and it will be done with careful planning. It's a way of preserving jobs here in New York," said Dr. Jha.

The deal still has to be approved by federal regulators but in that teleconference, both sides said this agreement makes each company stronger. They said they will continue working together in the future.

Time Warner Cable News: IBM to Transfer Chip-Making Business, Dutchess County Plant to GlobalFoundries