International Business Machines Corp. (IBM) Commits $3B in Chip R&D

International Business Machines Corp. (NYSE:IBM) committed an investment of $3 billion for the research and development (R&D) of semiconductor over the next five years as part of its initiative to develop game-changing innovation that would bolster its software and hardware business.

Tom Rosamilia, a senior vice president of Systems and Technology Group at International Business Machines Corp. (NYSE:IBM) said the company want to assure its investors that it is committed to the semiconductor sector.

“We believe there is great innovation possible that will be necessary in world of big data analytics. These are essential ingredients in delivering the kind of performance the world will demand. The world is demanding it now and will continue to demand it for the next 10 years,” said Rosamilia.

In addition, Steven Mills, a senior vice president in charge of software and systems businesses at International Business Machines Corp. (NYSE:IBM) said, “We don’t want anybody to be confused. We need to reinforce our long-term commitment to the hardware platforms that we have.”

International Business Machines Corp. (NYSE:IBM) is hoping to develop a technology that would reduce the size of conventional silicon chips and improve its efficiency. The company is researching new materials such as carbon nanotubes to boost the speed computing speed while using less energy. Carbon nanontubes are heat resistant, capable of providing faster connections and more stable than silicon.

Martin Schroeter, the CFO of International Business Machines Corp. (NYSE:IBM) emphasized that new R&D is important to revive the hardware sector during an investor briefing in May. He predicted that the sector will stabilize this year and grow in 2015.

The total investment of International Business Machines Corp. (NYSE:IBM) for R&D was $6.2 billion last year.  The company’s investment on chip research is almost 50% of its total R&D spending in the previous year.

Commenting on the investment of the company, Richard Dohery, a research director at The Envisioneering Group said, “You might say this is not a good time to be in the silicon chip business, but it is a great time to be ready for the next thing. This is the next thing.”

He noted that International Business Machines Corp. (NYSE:IBM) is the only big company investing in carbon chip research, and its investment could position the company miles ahead of its competitors such as Hewlett-Packard Company (NYSE:HPQ) and Oracle Corporation (NYSE:ORCL) as consumers are increasingly demanding for faster computing speeds.