IBM: GlobalFoundries violated the transaction agreement, demanded $2.5 billion in compensation
In April of this year, GlobalFoundries received a letter from IBM’s lawyer stating that it had breached the contract and required $2.5 billion in compensation. GlobalFoundries filed a lawsuit in the New York State Court this week, requesting a ruling that it did not violate the transaction contract with IBM, and this Monday is also the deadline for payment in the IBM lawyer’s letter.
According to Times Union reports, the incident originated in 2014 when IBM and GlobalFoundries reached a deal. IBM paid a total of $1.5 billion to GlobalFoundries over three years, allowing GlobalFoundries to take over its loss-making semiconductor manufacturing business and at the same time produce a new generation of Power series processors for IBM. In the following two years, GlobalFoundries invested about $10 billion to develop a foundry in New York.
IBM said in a statement that it paid $1.5 billion to GlobalFoundries to manufacture next-generation processors, but GlobalFoundries abandoned IBM after receiving the last payment and realized the assets obtained in the transaction and profited from it, which is the main reason why IBM demanded $2.5 billion in compensation. At the same time, GlobalFoundries announced in 2018 that it would abandon its advanced process research and development plan, which coincides with the completion time of the last payment by IBM. As a result, IBM will eventually have to pass Samsung before it can use advanced manufacturing processes to produce its own new generation of products.
GlobalFoundries denied the relevant allegations, saying that it made a difficult decision in 2018. The research and development of the 7nm process quickly exhausted the company’s resources and threatened normal operations. It was this decision that ultimately allowed GlobalFoundries to remain profitable for the next few years. GlobalFoundries currently plans to make large-scale investments to expand production capacity and plans to conduct an IPO at the same time. It is believed that IBM’s request for compensation at this time makes people doubt its motives.