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IBM’s Symbiotic Union with Samsung and GlobalFoundries


Aug. 4 2015, Updated 11:06 a.m. ET

Partnership is mutually beneficial for all three players

In the prior parts of the series, we covered IBM’s (IBM) launch of the 7-nm chip, the world’s smallest chip to date. IBM achieved this breakthrough by partnering with Samsung (SSNLF) and GlobalFoundries.

IBM also divested its chip operations to GlobalFoundries. With the divestment of its chip operations to GlobalFoundries, instead of locking horns with Intel in the chip manufacturing space, IBM has now strategically planned to boost its patent portfolio.

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IBM has the largest and most diversified patent portfolio

The above presentation by USPTO shows that among its technology peers Microsoft (MSFT), Google (GOOG), and Oracle (ORCL), IBM is the leader with close to 7,000 patents to its credit.

Samsung is one of the leading foundries with four manufacturing facilities with two in South Korea, one in Austin, Texas, and one in New York State. IBM designs its own chips, but has divested its chip manufacturing operations. Its association with Samsung and GlobalFoundries thus proved beneficial for its chip business. Partnering with IBM turned out to be a profitable proposition for GlobalFoundries too, as it got access to IBM’s vast and varied patent portfolio. By joining hands, all the players plan to gain a competitive edge over players like Intel.

You can consider investing in the VanEck Vectors Semiconductor ETF (SMH) to gain exposure to Intel. Intel makes up about 19% of SMH.


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