IBM to announce merger

IBM plans to announce in the coming days that it will merge its microprocessor and server groups in an effort to improve the company's own chips.

The combined unit will be called the Systems and Technology Group and will be jointly led by Systems Group chief Bill Zeitler and Technology Group chief John Kelly, sources familiar with the plan said.

IBM is making the change to improve its processors, not to reduce its expenses; there will be no cost reductions or layoffs, one source told silicon.com's sister site News.com.

IBM declined to comment on the plan.

IBM's Systems Group, which is profitable and has 13,000 employees, makes high-powered server computers. The Technology Group, unprofitable and with 17,000 employees, makes processors for IBM and outside customers including Apple, Microsoft, Qualcomm and Sony. The Technology Group also builds custom-made chips called application specific integrated circuits, or ASICs.

Merging the two groups will mean IBM can do a better job applying technology and expertise from outside work to its own Power processors, one source said. Ultimately, IBM hopes the majority of the computing world will move to one of two basic chip designs: Intel's "x86" processors, such as the Pentium or Advanced Micro Devices' Opteron, and IBM's Power processors such as its Power5 coming later this year or the PowerPC 970 used in Apple's G5 and IBM's JS20 blade server.

Stephen Shankland writes for News.com