IBM is combining its server and semiconductor units in an attempt to help each group improve their products.

The new IBM Technology and Systems Group is a combination of the Technology Group headed by John Kelly, senior vice president and group executive, and the Systems Group, headed by William Zeitler, also a senior vice president and group executive.

The two will share responsibility for the new division, overseeing their respective areas, said Chris Andrews, a company spokesman. Kelly's group designs, manufactures and sells processors to both external clients and IBM's server group, while Zeitler's organization designs and develops IBM's wide range of server technology from mainframes to blade servers.

No layoffs will occur as a result of the merger, Andrews said: "It just ends up being the realignment of organizational charts and internal reporting," he said.

"The real aim for this is that the two businesses are more closely aligned with each other, which provides a greater efficiency both internally and externally," Andrews said.

The Systems Group is coming off a good quarter, in which it had strong sales of servers with Intel processors. The group also had strong overall growth.

The two groups have always collaborated on new and existing products, but the new organizational structure will help formalize that relationship, Andrews said.

When a group's main customer is another group within the same company, the first group has to perform a delicate balancing act in order to keep all of its customers happy, said Illuminata analyst Gordon Haff,

IBM's Technology group had to work hard to convince the internal server group that it wasn't taking them for granted, and it had to persuade outside customers that it was paying as much attention to their concerns as it did to the server group, Haff said. By combining the groups, IBM can take some of that pressure off, he said.