IBM is to pay $1.5bn in cash to offload its loss-making chip manufacturing division to Abu Dhabi sovereign wealth fund GlobalFoundries, according to BBC News.

IBM, which wanted to avoid the cost of upgrading the unit's technology, said it would now focus on cloud computing, mobile and big data analytics.

IBM will take a $4.7bn charge in the third quarter as a result of the sale.

GlobalFoundries said it would offer jobs to all IBM employees affected.

"This acquisition enables IBM to focus on fundamental semiconductor and material science research, development capabilities and commitment to delivering future semiconductor technologies," said IBM senior vice president and director of research Dr John Kelly.

IBM will spread the $1.5bn payment to GlobalFoundries over the next three years.

Under the terms of the deal, GlobalFoundries will get intellectual property and technologies related to the chip business.

IBM's shares rose slightly in pre-market trading. The firm is due to report its third-quarter earnings later on Monday, Oct 20.