IBM sues GlobalFoundries for $2.5 billion over broken promises

IBM is taking GlobalFoundries to court because the latter abandoned the cutting-edge process node market in 2018. The root of the issue dates back to 2014, when IBM paid GlobalFoundries $1.5 billion to take its loss-making semiconductor factories off its hands. The $1.5 billion was not charity -- it came with a legal obligation that reportedly obligated GlobalFoundries to supply IBM with chipmaking services for next-generation chips.

Hexus reports IBM is now seeking $2.5 billion in damages because GlobalFoundries "abruptly and without any justification" walked away from IBM. Big Blue says it invested heavily in a long-term mutual relationship and claims GlobalFoundries "failed to act as a reliable partner and supplier."

The latest info about the dispute suggests that the very sizable payment to GF was given to not only take over the loss making IBM foundries but enter into a legal contract with various obligations. An IBM statement explains it as follows, "IBM contributed $1.5bn to GlobalFoundries to supply the next generation of chips, and Global Foundries utterly abandoned IBM as soon as the final payment was received and sold off assets from the deal for its own enrichment." This is the major reason that IBM is seeking $2.5bn in damages. GF abandoned its plans to pursue advanced chipmaking in 2018, and this must coincide with the ending of payments from IBM.

IBM now uses Samsung to get its processors manufactured. GlobalFoundries denies any wrongdoing and claims it dropped its pursuit of 7nm process technology because this venture threatened the firm's financial health.