IBM, Global reportedly working toward new chip deal
ALBANY – IBM Corp. and GlobalFoundries are said to be headed to arbitration as early as next week in the latest effort to strike a deal for IBM to sell its semiconductor manufacturing operations.
A source involved in the discussions between the companies told the Journal's Albany Bureau on Thursday that the sides are optimistic that an arbitrator can iron out the details. An agreement has stalled in recent months, including failed negotiations in the past few days, the source said.
The move toward arbitration is the latest sign that the Armonk, Westchester County-based IBM and GlobalFoundries haven't given up on a deal. IBM reportedly wants to sell its chip manufacturing assets in East Fishkill and Burlington, Vermont, to GlobalFoundries — which has a growing chip factory in Saratoga County. It has said it plans to keep research and design functions.
The SemiWiki website reported Tuesday that IBM and GlobalFoundries have reached a "handshake" agreement on a $2 billion deal that could be announced next month.
An IBM spokesman, Doug Shelton, said, "We do not comment on rumor and/or speculation." Travis Bullard, a spokesman for GlobalFoundries, said they had seen the blog post but replied, "We do not have any comment on the latest rumors."
News reports in recent months have said that IBM is looking to pay GlobalFoundries to take over its struggling chip plants, the chief one of which is near the East Fishkill hamlet of Wiccopee.
Already GlobalFoundries has been recruiting workers for its Saratoga County plant, and IBM in May dispatched about 150 to 200 technical employees to the Saratoga facility.
Bullard said that's still on. "There are about 120 right now and the current contractor services agreement with IBM runs through March 2015," he said.
New York has a major stake in the future of the two companies and is looking to retain IBM jobs in any sale.
IBM is a top investor in a $4.4 billion deal in 2011 with leading technology companies to expand research and development in New York, mainly at the SUNY College for Nanoscale and Science Engineering in Albany.
In February, IBM and Gov. Andrew Cuomo reached a deal to maintain 3,100 high-tech jobs in the Hudson Valley and surrounding areas through 2016.
The deal was part of IBM's expansion in Buffalo to create 500 jobs at a $55 million high-tech hub.
So during a round of IBM layoffs earlier this year, New York was spared while IBM cut jobs across the country, according to the Times-Union in Albany.
Because New York owns the equipment and facilities that IBM uses for research and development in Albany, the state has unmatched leverage.
IBM, for example, announced in July it will invest $3 billion in computer chip development and research. Most of that money is expected to be spent in New York.
Also, as part of any sale to GlobalFoundries, state officials are pressing IBM to expand its job-retention commitment past 2016 and to expand it to nearly all of the roughly 14,000 IBM employees in the state. IBM has facilities in Endicott, Broome County, with about 700 workers, along with its offices and facilities in Westchester and Dutchess counties, including its mainframe plant in Poughkeepsie. Nearly 7,000 IBMers work in Dutchess.
Ron Hicks, Dutchess' deputy commissioner for strategic planning and economic development, said he had not heard any details of the rumors, which were the first to emerge in several weeks after reports emerged that talks for a deal had collapsed.
New York has also given tax breaks and incentives to both companies.
Between 2000 and 2013, IBM received $880 million in tax breaks in New York, a report earlier this year said. GlobalFoundries, meanwhile, received more than $1 billion in incentives from the state for its massive manufacturing plant in Malta, Saratoga County.
IBM's first manufacturing facility was in Endicott in the early 1900s.
Craig Wolf contributed to this report. 845-437-4815; cwolf@poughkeepsiejournal.com; Twitter: @craigwolfPJ. Joseph Spector:: Jspector@Gannett.com; ww.twitter.com/ gannettalbany
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