IBM is paying $1.5 billion to Globalfoundries in order to shed its costly chip division.
IBM will make payments to the chipmaker over three years, but it will take a $4.7 billion charge in the third quarter when it reports results Monday.
Globalfoundries will get IBM's global commercial semiconductor technology business, including intellectual property and technologies related to IBM Microelectronics. It also gets IBM's existing semiconductor manufacturing operations and plants in East Fishkill, New York and Essex Junction, Vermont, as well as its commercial microelectronics business.
Under the agreement, Globalfoundries will become IBM's exclusive server processor semiconductor technology provider for 22 nanometer (nm), 14nm and 10nm semiconductors for the next 10 years.
Shares of International Business Machines Corp., based in Armonk, rose slightly in premarket trading.