IBM and GlobalFoundries settle multibillion-dollar trade secret and contract lawsuits

IBM and semiconductor maker GlobalFoundries have settled all of their litigation against each other, including breach of contract, patent, and trade secret suits, the pair say.

The details of the settlement are confidential. All that both companies were prepared to say in yesterday's statements was that the deal they'd agreed would resolve "all litigation matters, inclusive of breach of contract, trade secrets, and intellectual property claims between the two companies." They added that the settlement would allow the companies to "explore new opportunities for collaboration in areas of mutual interest."

The disputes and litigation between IBM and GlobalFoundries, formerly AMD's chipmaking unit which it spun out in 2009, were complex and spanned both state and federal courts.

The first main shot was fired by IBM in 2021, in a New York state court, over chip production (or non-production). The pair had signed a $1.5 billion deal in late 2014 where IBM transferred its semiconductor manufacturing business to GlobalFoundries. GF was supposed to take over the delivery of 14 nanometer technologies for IBM Power and z processors and deliver 10nm and smaller wafer-etching techniques as part of a ten-year agreement.

As our sister site The Next Platform mentioned at the time, there had been delays in getting 14nm chips out of the fabs. A spiking of the 10nm and then later the 7nm process, in August 2018, at least in Big Blue's estimation, had left it "without a server roadmap, essentially." IBM asked the court for $2.5 billion in damages, which GF contested in its own complaint [PDF] was a baseless claim. GF claimed at the time that not only had it "fulfilled its contractual obligations to IBM" but that Big Blue's switch to Samsung as a supplier of 7nm processor chips for datacenters had actually saved IBM money and cut delivery times (though the judge wasn't convinced by the arguments).

The second key lawsuit, filed by GlobalFoundries in 2023 in a New York federal court, involved partnerships announced between Big Blue and Intel and Japan's Rapidus in 2021 and 2022 respectively. In the 2023 suit, the semiconductor maker accused IBM of unlawfully disclosing its confidential trade secrets and IP to its partners. It also alleged [PDF] in the complaint that IBM had been performing a "systemic poaching of GF's most qualified semiconductor manufacturing engineers in order to generate even more licensing revenue by enabling other companies with GF IP."

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In their joint statement, the companies also expressed that the confidential settlement created "satisfaction with the outcome" from both parties. Some might suggest it makes sense to be cooperative and collaborative, especially as a potential outcome of the injunction GlobalFoundries had been asking for in the 2023 complaint may well have derailed Intel and Rapidus's roadmaps, as The Reg previously mentioned here. This is meaningful to IBM, which said last month it was "moving closer to scaling out 2nm chip production" in its partnership with Rapidus. GF had originally claimed in the now settled [PDF] federal lawsuit that when IBM planned to share the "technology underlying the '2nm node chip'" with Rapidus that this had allegedly included "GF-Controlled Trade Secrets that were developed by GF and IBM."

IBM and Rapidus presented their research on strategies for selective nanosheet layer reduction – which should help them more consistently construct chips with a 2nm process – at the IEEE International Electron Devices Meeting in San Francisco in December.

GlobalFoundries, fined $500,000 last year for sanctions violations involving China, was awarded up to $1.5 billion in November last year under the US government's CHIPS and Science Act.

America's Commerce Department claimed GlobalFoundries was one of "only four companies outside of China" that it considered could provide foundry capabilities for current and mature process nodes on a necessary scale for the act's national goals, and is the only one of these headquartered in the United States. ®