International Business Machines Corp. (IBM) earmarks $3 billion in chip research

Posted Jul 11, 2014

International Business Machines Corp. (NYSE:IBM) is planning to spend $3 billion in research and development over the next five years. IBM will be funding two programs to create smaller and powerful chips that can be used in IBM Watson.

IBM is reportedly planning to sell its chip-manufacturing business to Globalfoundries Inc., according to Bloomberg. Globalfoundries is mostly interested in IBM’s engineers and intellectual property. IBM wants to maintain the control of the design and I.P. of the chips it uses.

?We fundamentally believe that no other company can do this level of innovation for the chip,? stated Tom Rosamilia, senior vice president of IBM?s systems and technology division, in an interview with Bloomberg. ?Our clients are driving us to continue to innovate to this high-performance world. It?s all about the breakthroughs that are on the horizon that we see need to be done.?

The spending will be around $600 million per year (10%) of IBM’s annual R&D budget. The investment represents IBM’s commitment to designing semiconductors that are specialized on running its mainframe, Power, and Watson systems.