IBM Sues GlobalFoundries for $2.5B Over Wrecked Process Node Transitions


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IBM has sued GlobalFoundries for its failure to provide a operate 10nm node or the 7nm node that was intended to replace it. The particulars in the scenario day back to 2014, when the two businesses signed a offer for GlobalFoundries to make 10nm chips and POWER9 CPUs for IBM. IBM gave GlobalFoundries its Microelectronics division, and GlobalFoundries promised to assist IBM for a ten years. It was envisioned that GF would deliver 14nm on time, followed by a transition to 10nm.

Points did not go as prepared. GlobalFoundries was late delivering 14nm and at some point canceled 10nm improvement altogether. IBM was evidently prepared to do the job with GlobalFoundries on that situation, and would have recognized the company’s 7nm method as a substitute, had that node occur to market. It didn’t. As a substitute, GlobalFoundries declared it would go away the top edge and become a next-tier foundry, competing far more with providers like UMC and SMIC as opposed to TSMC, Samsung, or Intel.

There’s an amusing quotation in IBM’s court filing:

Those people representations were an vital precondition to IBM coming into into any romantic relationship with GlobalFoundries, as GlobalFoundries had not been a considerable participant in the Superior Effectiveness semiconductor company. Only by obtaining IBM’s technological innovation, staff members and mental residence, would GlobalFoundries be in a position to grow into earning Large Performance semiconductor chips for IBM and for some others.

That’s a little bit significantly. The foundries GF bought — Fabs nine and 10 — were being out-of-date by the time it acquired them. Fab nine is a 200mm facility that developed 90nm and above chips. Fab 10 is more recent, and at this time builds 14nm chips with 300mm wafers, but it’s a great deal more compact than the so-known as “gigafabs” now deployed by Intel, TSMC, and Samsung. The idea that buying these two structures was likely to somehow rocket GlobalFoundries into a far more competitive posture does not endure the sniff exam.


Aerial see of GlobalFoundries Malta campus, the place its most innovative chips are designed.11

What GlobalFoundries essential wasn’t IBM know-how. It required IBM’s business. A single of the explanations given for why the company left the primary edge was its incapability to land main clients. Ramping up a new node for one-two consumers isn’t actually feasible, particularly if the chip volumes are rather tiny. AMD had previously said that it would no longer spend for custom, AMD-specific nodes. This remaining GlobalFoundries scrambling for prospects. Had the organization continued working on 7nm it would have benefited from the latest semiconductor growth, but rumors at the time prompt GlobalFoundries’ house owners were not ready to carry on pouring money into a business enterprise that had in no way turned a financial gain.

Timothy Prickett Morgan at Future System has prepared an exceptional tale on the circumstance, with a discussion of how the delay impacted the growth of POWER9 and Energy10. He also delivered a copy of IBM’s filing that wasn’t publicly out there. GlobalFoundries’ reaction can be examine in this article.

IBM’s grievance is clear-cut: It signed a deal for 14nm and 10nm CPUs with GlobalFoundries back again in 2015. Months later on, GlobalFoundries declared it was canceling 10nm, but would provide IBM a 7nm course of action rather. It failed to do so. IBM declares:

Acquiring taken the one.five billion and extracted the rewards of the finest-in-class technological know-how, engineers, and intellectual home from IBM, GlobalFoundries discovered that its representations about remaining committed to Significant Functionality technologies ended up bogus. GlobalFoundries misled IBM in get to acTuire IBM’s semiconductor business enterprise and type an ostensibly mutually useful alliance, which GlobalFoundries then deliberately and dishonorably discarded when it suited GlobalFoundries’ applications.

GlobalFoundries Reaction

GlobalFoundries’ reaction to IBM’s accusations of greed boil down to “no u” with a aspect buy of suspicious timing. GF argues that go well with has been introduced at a time when it is preparing for an IPO. A business with a huge lawsuit hanging around its head from IBM could possibly not be valued as very as it would be otherwise. GF notes that it stopped developing 10nm roughly six years back and stopped acquiring 7nm approximately a few decades in the past. It writes:

IBM viewed GF’s accomplishment and the news of the IPO, then looking for a speedy payday in the hopes that GF would not protect by itself, IBM sent a authorized dispute letter from a top rated tier, pricey white-shoe New York legislation firm to GF, demanding that it shell out an outlandish $2.5 billion in unspecified damages for alleged breaches that, right up until April 2021, experienced never ever been asserted, and with no any actual explanation as to the basis of its claims… IBM also has a track record of making licensing requests, at or near, quarter end to meet Wall Avenue analyst earning expectations and this intense move is steady with that playbook.

GF also claims that it sought to solution this difficulty as a result of an agreed-on, 60-day dispute process, but obtained no response from IBM. The organization seeks a declaration that it did not violate the letter of its settlement with IBM and that the company’s lawsuits are not primarily based on any broken deal. It also argues that IBM is upset that semiconductor desire has spiked some a long time immediately after it marketed its fabs.

There is 1 seeming position of agreement among the two corporations. IBM notes in its match that GF never ever meant to come to be a foremost producer of 7nm chips in conditions of full volume. GlobalFoundries acknowledges this tacitly when it writes:

IBM quickly discovered a new, and significantly less pricey, 7nm technologies supplier in Samsung. Indeed, the arrangement labored out greater for IBM as Samsung, upon information and facts and perception, was in a position to source the technological innovation far more swiftly than GF would have been in a position to and at considerably much less value to IBM. IBM truly benefitted from GF’s determination to cease performing on 7nm technologies.

Arguing that your husband or wife benefited from your possess incapacity to make microprocessors is a bold move. We’ll see if it pays off for them.

Function image demonstrates GlobalFoundries’ Dresden facility from the air. Image by Fensterblick, CC BY-SA three..

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