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Semiconductor devices

Acer Strengthens Ties with IBM through Multi-Billion Dollar Alliance

Strategic Insights

— 1 min read

Acer, the world's third-largest personal computer manufacturer, has solidified its relationship with International Business Machines (IBM) through a seven-year procurement and technology development alliance worth billions of dollars. This strategic partnership will enable Acer to purchase cutting-edge technologies, such as hard disk drives, micro-electronics, networking, and displays, from IBM, which will in turn benefit from Acer's low-cost manufacturing capabilities. Acer also plans to sell a 30% stake in its computer chip unit, Acer Semiconductor Manufacturing (Asmi), to Taiwan Semiconductor Manufacturing (TSMC), the world's largest producer of made-to-order computer chips, in a deal valued at over $153 million.

Key Takeaways:

  • Acer will purchase around $8 billion worth of technology from IBM over the next seven years, including hard disk drives, micro-electronics, networking, and displays.
  • The partnership will allow Acer to access rival technologies and will not be committed to the spending target of $8 billion.
  • Acer expects to achieve substantial savings from the internal use of IBM's electronic business solutions, which could later be marketed outside the group.
  • The deal enables Acer to sell IBM technologies through its distribution channels and clears the way for potential "significant" sales of Acer display units to IBM.
  • The partnership will also speed up the development of cheap application-specific computers, dubbed XCs, which are a key future product for Acer.

Statistics:

  • Acer will spend around $8 billion on technology from IBM over the next seven years.
  • Acer's computer chip unit, Asmi, lost over T$5 billion (approximately $153 million) in 1998.
  • The sale of a 30% stake in Asmi to TSMC will earn Acer Inc a profit of over T$1 billion (approximately $30 million).
  • IBM's latest deals include a $16bn technology agreement with Dell, pacts with software provider EMC and Japanese games maker Nintendo.

Sources:

  • Financial Times Limited, 1999.

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