Update as of 7:08 a.m. EDT: IBM will spin off its semiconductor foundry to Globalfoundries for $1.5 billion in cash, reports said citing a company statement.


IBM will pay $1.5 billion to Globalfoundries, a Santa Clara, California-based semiconductor foundry, to take over the computer pioneer's struggling chip-manufacturing unit, a report said Sunday.

IBM, which issued an advisory on Sunday saying that it would make a “major business announcement” on Monday, is expected to announce the deal along with its third-quarter results, Bloomberg reported, citing two people familiar with the matter.

According to the report, IBM’s CEO Ginni Rometty finally struck the deal with Globalfoundries after months of talks between the companies. The sources told Bloomberg that Globalfoundries will have access to IBM’s key chipmaking technology to produce and supply the Armonk, New York-based technology giant with Power processors for its systems, such as mainframe computers and its Watson data-analytics technology.

IBM, which initially hoped to sell its chip unit for more than $2 billion, will pay Globalfoundries the $1.5 billion over a period of three years, Bloomberg reported.

IBM said earlier this month that it had mostly completed the sale of its commodity-server business to Lenovo for $2.1 billion, with up to 7,000 workers to be transferred to the Chinese company.

IBM’s shares were up 1.23 percent on the New York Stock Exchange at Friday's closing.