All of the chips that IBM makes Apple account for 2% of the output at just one of its fab plants (East Fishkill, NY).
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For I.B.M., the end of the Apple partnership means the loss of a prestigious customer, but not one that is any longer very important to I.B.M.'s sales or profits. It further underlines how much I.B.M. and its strategy in recent years have moved away from the personal computer industry that it helped create. Last month, I.B.M. completed the sale of its personal computer business to Lenovo of China.
Even as a chip maker, I.B.M. has moved aggressively beyond the PC industry, focusing on making the processors for video game consoles from Nintendo, Microsoft and Sony, and specialized chips for other uses, like the Internet router computers made by Cisco Systems and cellphone technology by Qualcomm. I.B.M. also uses its Power microprocessors in many of its own server computers, which run corporate networks.
Even as a chip maker, I.B.M. has moved aggressively beyond the PC industry, focusing on making the processors for video game consoles from Nintendo, Microsoft and Sony, and specialized chips for other uses, like the Internet router computers made by Cisco Systems and cellphone technology by Qualcomm. I.B.M. also uses its Power microprocessors in many of its own server computers, which run corporate networks.
For years, according to industry analysts, the work for Apple has been barely a break-even business for I.B.M. When the two companies were negotiating a new contract recently, Mr. Jobs pushed for price discounts that I.B.M. refused to offer. For I.B.M., "the economics just didn't work," said one industry executive who was briefed on the negotiations. "And Apple is not so important a customer that you would take the financial hit to hold onto the relationship."
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