International Business Machines Corp.'s attempt to sell its slumping chip manufacturing business to Globalfoundries Inc. deteriorated when the two companies failed to agree on a price, Bloomberg reported on Friday.

The breakdown in talks between the two companies marks a setback for IBM, which has been trying to divest its chip making business to focus instead on chip research and design.

IBM rejected Globalfoundries' offer because it was too low, Bloomberg reported, citing people familiar with the matter.

Earlier this month, the company announced a $3 billion investment in chip research and development over the next five years.

IBM shares were down 0.6 percent at $194.07 in late afternoon trading on the New York Stock Exchange.