Report: IBM Considers Selling Semiconductor Business

by Christopher Freeburn | February 7, 2014 9:41 am

Report: IBM Considers Selling Semiconductor Business

Unnamed sources tell the Financial Times that IBM (IBM[1]) may exit the semiconductor manufacturing business[2].

IBM sign 630 300x225 Report: IBM Considers Selling Semiconductor Business[3]
Source: Flickr[4]

According to the sources, IBM is seeking a buyer for IBM factories that produce semiconductors used in corporate servers. The move could improve margins at IBM by reducing capital costs. The sale would moved IBM farther away from its historic roots as a technology manufacturer.

Computer chip sales have been sliding[5] for IBM. During the first nine months of 2013, chip sales fell 3%. One analyst estimates that the chip-making unit produced a $130 million pre-tax income loss for IBM last year. IBM plans to continue its semiconductor design business even if it sheds all or part of its chip-manufacturing unit, the Wall Street Journal notes.

Both Sony (SNE[6]) and Microsoft (MSFT[7]) recently dumped IBM computer chips from the latest generation of the flagship video gaming consoles.

Last month, IBM said it would sell its low-end server manufacturing business[8] to Lenovo Group (LNVGY[9]) for $2.3 billion.

IBM stock rose modestly in Friday morning trading. IBM stock has slid about 12% over the past twelve months.

Endnotes:
  1. IBM: http://studio-5.financialcontent.com/investplace/quote?Symbol=IBM
  2. exit the semiconductor manufacturing business: http://www.ft.com/intl/cms/s/0/f563bea0-8fa5-11e3-9cb0-00144feab7de.html#axzz2seA9PGYc
  3. [Image]: http://investorplace.com/wp-content/uploads/2011/11/IBM-sign-630.jpg
  4. Flickr: http://www.flickr.com/photos/themonk/
  5. sales have been sliding: http://online.wsj.com/news/articles/SB10001424052702303496804579367710245657016
  6. SNE: http://studio-5.financialcontent.com/investplace/quote?Symbol=SNE
  7. MSFT: http://studio-5.financialcontent.com/investplace/quote?Symbol=MSFT
  8. would sell its low-end server manufacturing business: http://investorplace.com/2014/01/ibm-stock-ibm-lenovo/#.UvTvdXlhOf0
  9. LNVGY: http://studio-5.financialcontent.com/investplace/quote?Symbol=LNVGY

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