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International Business Machines Corporation IBM recently announced that it has reached a settlement on the company’s ongoing legal issues with GlobalFoundries, Inc. GFS. The resolution includes the settlement of all disputes regarding breach of contract, trade secrets and intellectual property claims. The terms of the settlement have been kept confidential.
Background
IBM sold its semiconductor plants to GlobalFoundries in 2015. In 2021, IBM filed a lawsuit against GlobalFoundries, accusing them of breaching a $1.5 billion contract to manufacture high-performance chips for IBM. In 2021, IBM formed a partnership with Intel to expedite semiconductor manufacturing innovation. In 2022, IBM and Japan-based Rapidus Corporation formed a joint collaboration to develop next-generation semiconductor technologies and position Japan as a global leader in semiconductor research and innovation.
Following these developments, in 2023, GlobalFoundries sued IBM, accusing them of misappropriating GFS' chipmaking trade secrets and sharing them with Intel and Rapidus.
Will This Development Benefit IBM’s Share Price?
IBM boasts a leadership position in the hybrid cloud and AI space. Its industry-leading solution and consulting expertise are utilized by around 4000 government and corporate entities from several sectors, including communication, healthcare, financial services and more. GlobalFoundries is a major player in semiconductor manufacturing with a strong foothold in automotive, smart mobile devices, Internet of things, communications infrastructure and other high-growth markets. Both organizations hold significant positions in today’s ever-changing technology landscape.
Positive resolution of the all-litigation matters showcases a practical approach from both organizations. This underscores the potential benefits of future collaboration that outweigh the uncertainties associated with prolonged legal battles and open up new avenues of revenue generation. The combination of IBM’s strong research foundation with GlobalFoundries’ advanced semiconductor manufacturing capabilities can facilitate the development of cutting-edge solutions across several industries. This will likely boost IBM’s commercial prospects in the long run.
IBM Stock’s Price Movement
Shares of IBM have gained 36.7% in the past year compared with the industry’s 9.4% growth.
Image Source: Zacks Investment Research
IBM’s Zacks Rank and Key Picks
IBM currently carries a Zacks Rank #3 (Hold).
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InterDigital IDCC sports a Zacks Rank #1 at present. In the last reported quarter, it delivered an earnings surprise of 114.47%.
It is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. The company designs and develops a wide range of advanced technology solutions used in digital cellular, wireless 3G, 4G and IEEE 802-related products and networks.