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Published on : Jul 10, 2014

Even amidst talks of International Business Machines Corp. (IBM) selling its chip-manufacturing unit, the company has decided to invest USD 3 billion in research and development of semiconductors over the next five years. IBM will fund two research projects to create smaller and more powerful chips that can be used in its systems. The program will also be aimed at developing non-silicon parts of semiconductors. 

IBM’s chips have been used in computers, gaming machines and other equipments, and with Intel Corp. eating into the semiconductor market, IBM’s move to expand may help strengthen its role in the industry and show investors its commitment towards research and development. Currently, of the company’s total annual revenue of USD 100 billion, only 2% comes from microelectronic manufacturing. 

The New York-based company is in talks with Globalfoundries Inc. over selling the chip-manufacturing business. Gobalfoundries is more interested in procuring IBM’s intellectual property and engineers. 

The company has been losing nearly USD 1.5 billion a year and had been seeking a buyer for its chip-manufacturing units since last year. In the last quarter, hardware sales were down 23% compared to last year and the company also recorded its lowest quarterly revenue in five years.  IBM’s low-end server unit has recently been bought by Beijing-based Lenovo Group Ltd. for USD 2.3 billion.