IBM invests in big chip breakthrough

ibm-officeIBM, which has remodelled itself as a business services outfit, has surprised everyone by wanting to be a big player in the chip market again.

Biggish Blue said it will invest $3 billion over the next five years in chip research and development. It wants to find a breakthrough that can help revive its slumping hardware unit.

The plan was announced a week before its second quarter earnings, which, if they are anything like last quarter, will be dire for hardware.

Last quarter sales in its hardware sector plunged 23 percent from a year earlier and the company posted its lowest quarterly revenue in five years.

IBM thinks it can find ways to scale and shrink silicon chips to make them more efficient. The money will be spent researching new materials to use in making chips, such as carbon nanotubes, which are more stable than silicon, are also heat resistant, and can provide faster connections.

Tom Rosamilia, senior vice president of IBM’s Systems and Technology Group said that the announcement was a message to investors is that IBM was committed to chips and thinks great innovation possible.

The investment is equal to half of all IBM’s research and development last year.

Oddly the company is preparing to divest its chip manufacturing business to focus on intellectual property so any developments will be in the nature of being fabless chipmaker. IBM was rumoured to be close to a deal with chipmaker Globalfoundries.