GlobalFoundries and IBM have officially resolved all ongoing litigation, concluding a series of legal disputes that spanned several years. The settlement addresses claims of breach of contract, trade secrets, and intellectual property violations, bringing closure to a complex legal battle tied to a business transaction between the two companies.
“We are pleased to have reached a positive resolution with IBM, and we look forward to new opportunities to build upon our long-standing partnership to further strengthen the semiconductor industry,” said GlobalFoundries president and CEO Thomas Caulfield.
Legal tussles between GlobalFoundries and IBM
In 2015, IBM transferred its semiconductor manufacturing business to GlobalFoundries in a deal valued at $1.5bn. The agreement included the transfer of IBM’s manufacturing facilities in East Fishkill, New York, and Essex Junction, Vermont. Alongside the move, IBM agreed to pay GlobalFoundries to assume operational responsibility for the facilities. As part of the deal, GlobalFoundries committed to supplying IBM with advanced semiconductor chips for a decade to meet the latter’s technological requirements.
However, disputes arose over the execution of this agreement. In 2021, IBM filed a lawsuit, accusing GlobalFoundries of breaching its contractual obligations by failing to deliver 7-nanometre (7nm) semiconductor chips. IBM alleged that GlobalFoundries had abandoned the development of 7nm technology, which it described as critical for next-generation computing systems. The lawsuit argued that this breach caused substantial operational disruptions and financial harm, forcing IBM to secure alternative suppliers at higher costs.
IBM also claimed that the failure undermined its research and development efforts, delaying the introduction of key products to the market. The company sought damages totalling $2.5bn to cover the financial and reputational impact caused by the alleged breach.
In response, GlobalFoundries initiated a countersuit in 2023, accusing IBM of improperly sharing trade secrets and intellectual property with competitors. The allegations stated that IBM disclosed proprietary technologies to companies such as Intel and Japan’s Rapidus without authorisation. GlobalFoundries claimed these actions resulted in IBM gaining unfair advantages through licensing agreements and other collaborations.
The settlement, announced on Thursday, brings an end to these legal proceedings. The terms of the agreement are confidential, but both companies expressed satisfaction with the outcome.
The semiconductor industry has undergone significant changes during the course of this legal dispute. GlobalFoundries has become a key player in domestic chip manufacturing, receiving $1.5bn from the US government to expand production facilities in New York and Vermont. This funding is part of a broader initiative to boost domestic chip production and reduce reliance on foreign manufacturers.
The conclusion of the dispute also had immediate effects on the stock market. Shares of GlobalFoundries, traded on the NASDAQ, rose by 2.61% following the announcement. IBM, listed on the New York Stock Exchange, experienced a more modest 0.49% increase.
“Resolving these disputes is a significant step forward for our companies and will allow us to both focus on future innovations that will benefit our organisations and customers,” said IBM chairman and CEO Arvind Krishna.
Meanwhile, IBM is facing another hurdle as the UK’s Competition and Markets Authority (CMA) has initiated a Phase 1 investigation into its planned $6.4bn acquisition of HashiCorp, a multi-cloud infrastructure automation company. The investigation is focused on evaluating whether the proposed deal could lead to a substantial reduction in competition within the UK’s cloud and IT markets. This scrutiny comes amid heightened attention to the cloud services sector in the UK. The CMA’s inquiry follows recommendations from Ofcom, the UK’s telecommunications regulator, which recently called for a more in-depth assessment of competition dynamics in the cloud industry.
Read more: UK CMA initiates phase 1 investigation into IBM’s $6.4bn acquisition of HashiCorp
