Could IBM soon be the only supplier of PowerPC chips, the microprocessors that power Mac computers? Motorola has said it will sell or float its semiconductor division if the unit doesn’t start performing better; it lost US$381 million in the second quarter.
Possible buyers for the unit could include IBM or AMD, although a spin-off is still a possibility, especially if Motorola “is looking at a timeframe of a year or more,” according to a
“Every segment of the company must contribute to shareholder value,” Motorola’s director of investor relations Ed Gamms told ComputerWire. “There are no sacred cows.”
According to Computerwire.com reporter Dan Jones, Gamms said that the loss-making unit has been trailing its rivals and has to close the gap. But he didn’t reveal how long the semiconductor unit has to make a turnaround before being sold or spun off.
If the unit doesn’t become profitable, Motorola could sell off the entire unit or just some of its assets, such as some of the production plants it owns. However, if Motorola does decide to sell the entire unit, IBM is likely to be the buyer, said Cary Snyder, an analyst at the Microprocessor Report. Motorola is a natural fit for IBM because of the overlap between the two companies’ product lines with Power PC, Rapid I/O and wireless chips, he said.
Both IBM and Motorola are part of the AIM (Apple, IBM, Motorola) alliance designed to promote the PowerPC chip. However, IBM and Motorola have taken different paths on their PowerPC roadmap. Motorola, and Apple, are big proponents of AltiVec, the PowerPC extension technology that Apple has branded as Velocity Engine. IBM has never appeared very keen on AltiVec, concentrating instead on sheer processing speed. In fact, IBM is expected to have 1GHz chips ready by the end of the year, with 2GHz chips to follow late in 2002.
On the other hand, if Motorola were looking to sell fabrication plants, then AMD might look better than IBM.
“AMD is potentially looking at not being able to fulfill its customer requirements,” Snyder told ComputerWire. “So a fab buyout would make sense. Indeed, there have been persistent rumours that AMD has plans to purchase Motorola’s stake in the Dresden, Germany-based fab that the companies jointly own.”
However, an IPO (initial public offering) for the semiconductor unit is also a possibility, especially if Motorola is taking a more long-term view of its performance, according to ComputerWire.