IBM to pay Globalfoundries $1.5bn to take chip manufacturing unit off its hands

IBM will offload its chip manufacturing arm to Globalfoundries for $1.5 billion (£930 million) – although it's IBM which will be paying GF to take the unit, as it's making a considerable loss currently.

The buzz is that this is a deal which will be revealed later today, when IBM announces its latest quarterly earnings (and presumably a pretty poor performance for said chip business). Two sources (the usual anonymous folks in the know) told Bloomberg this is going to happen, and it ties in with the fact that IBM has said it will be making some form of major business announcement today.

IBM will, however, be given $200 million (£125 million) of assets in return, meaning the true cost of the agreement will be $1.3 billion (£805 million) to IBM.

Apparently the sources also said Globalfoundries will supply IBM with Power processors, in exchange for access to IBM's intellectual property, over a 10 year agreement.

Related: Lenovo secures IBM's x86 server business in cut-price deal

The move is no surprise given the performance of the chip unit, and the broad strategy IBM is pursuing of divesting itself of its hardware divisions. The company is selling its server division off to Lenovo, with that deal recently closed for less than expected at $200 million (£123 million), and previously the company sold off its PC division.

It's hardly the only company to decide that software and services are the way forward rather than hardware, though.

We'll keep our ears and eyes open for IBM's announcement, which should be imminent...